Stocks slid along with US equity futures as disappointing results from tech giants soured sentiment and marred a tentative recovery in equities. Treasuries retreated, with benchmark yields topping 4%.
The benchmark yield in India’s one-trillion-dollar sovereign bond market is holding remarkably steady despite a ballooning government borrowing program. A possible reason for the lull is that the central bank now holds more than half of the closely watched 10-year bond. The Reserve Bank of India has lifted its holding of the 5.85% 2030 bond to 545 billion rupees ($7.5 billion) or at least 52% of the total outstanding via Operation Twists, two tranches of government securities acquisition program and indirectly via a special auction in February, Bloomberg calculations show. The number is likely even higher if the RBI’s discreet secondary-market purchases are incorporated.
In what could be worrying for both the Reserve Bank, which has successfully managed to keep the bond yields under check till January, and also the government in terms of higher interest payout, a report has warned that the benchmark yields can jump to 6.40 per cent by March 2022. The yields are likely to rise from 5.82 per cent now to 6 per cent by the end of March this year, the report by Acuit Ratings said on Thursday. The benchmark bond (10-year tenor) yields had fallen to 5.6 per cent during the peak of the pandemic crisis but have since been rising and jumped 31 bps since the Budget.
Read more about Primary dealer fees rise over 40x as RBI lures them to underwrite auctions on Business Standard. The central bank is offering commissions as high as 50 paise per Rs 100 face value for a bond maturing in 2050, compared with just 1.24 paise on April 30, 2020