Gilt yields decline after Fed cut
Gilt yields decline after Fed cut Gilt yields dropped on September 19, after the US Federal Reserve cut its interest rates. The sentiments of the investors mainly got affected with the benchmark Federal interest rate declining 50 basis points to 4.75% as well as discount rate coming down by half percentage point to 5.25%. The debt market looks attractive with the occurrence of this development. The cut would eventually help the US economy from a slowdown, luring the investors to invest in emerging financial market like India. Liquidity seemed to be enough, causing the yield to decline on overseas investment in the local market. Low inflation, that is below 4% mark, also helped the yields to move down. But investors need to watch in the coming weeks, as there is pressure on central bank with the surging crude oil prices. Crude oil price crossed the level of USD 82 a barrel this week. The basket of Ind ian crude oil have also crossed the USD 72 a barrel causing the Indian oil companies to suffer losses. There is speculation that the centre may hike the prices of diesel and petrol, resulting the inflation to hike. However, the benchmark 10-year bond yield ended low at 7.82%, as against its previous day`s close of 7.85%.
