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Bond Yields Soar to Multi-Year Highs on Oil Spike
29 Sep
Summary
- 10-year benchmark government bond yields hit highest since April 2024.
- Rising oil prices and global yields are driving the surge.
- RBI is managing liquidity through open market operations.
Yields on the 10-year benchmark government bond have climbed to their highest level since April 2024, reaching 7.19%. This increase is primarily attributed to a recent spike in oil prices, which has heightened inflation concerns, and a broader uptick in global yields. Traders are currently experiencing substantial losses as the rising yields negatively impact the value of bonds bought in prior periods.
The Reserve Bank of India (RBI) is actively managing liquidity within the banking system by conducting open market operations (OMO) sales. These measures aim to reduce the excess liquidity that had accumulated following foreign currency non-resident (B) inflows. The banking system's liquidity now stands at ₹4.39 lakh crore, a significant decrease from earlier in the month.
