Gilt yeilds remained flat
Weekly wrap up: Gilt yeilds remained flat Gilt yields remained flat on September 17, as traders took a pause to build positions on tight liquidity conditions. Investor`s sentiments were backed by the corporate paying taxes and the declaration of decision on interest rates by the US Federal Reserve Bank. Uncertainty of US interest rates and low inflation kept the benchmark yields of the federal 10-year bond flat at 7.86%, unchanged from Friday`s close. Gilt yields remained low on September 18, on speculations that the US Fed will cut it`s interest rates aggressively by 25 basis point. The traders were aggressive on the Fed`s cut on interest rates, investor`s sentiments had overweighed the fact of tight liquidity conditions ahead of the tax payments to be made by the corporate. The overnight call rates stood high at 7.50% The benchmark yield on the 10-year bond yields end ed at 7.85%, down a point from Monday`s close of 7.86 %. Gilt yields continued to move down on September 19, followed by the Fed rate cut and bullish sentiments. This decision eventually helped the US economy from a slowdown, luring the investors to invest in emerging financial market like India. Gilt yields remained flat on September 20, as traders took a pause on building fresh positions on shortage of cash conditions after the corporate paid their taxes. Gilt yields continued to remain flat on September 21, despite the fall in inflation which stood at 3.32%.The sentiments of the traders were affected by tight conditions as corporate had routed their money to pay taxes and banks faced shortage of liquidity on cash outflows. Further fall in inflation led the traders to believe that the central bank will take a stance on monetary policy. Rupee appreciation, liquidity conditions, and surging crude oil prices were expected to exert pressure on the RBI to take a stance. The benchmark 10-year bond yields ended at 7.82%, unchanged from Thursday`s close as traders awaited for more clues based on ongoing movements in the glob al market.
With inflation below 4%, the Indian debt market looks attractive after the US Fed decision. However, the benchmark 10-year bond yields ended low at 7.82%, as against the previous day`s close of 7.85%.
Trader`s sentiments were affected by the crude oil prices which registered new highs, hovering above USD 80 a barrel. There were speculations that the central government would raise the price of petrol and diesel that would in turn lead to ris e in inflation. Besides that, the surging Rupee was expected to pressurise the central bank to cut interest rates. Traders awaiting leads, coupled with inflation figures; led the benchmark 10-year bond yields to end at 7.82%, unchanged from Wednesday`s close.
