Mumbai: Yields on the 10-year benchmark government security climbed three basis points since its previous close, on the back of rising US treasury yields, ahead of presidential elections in the world’s largest economy, bond dealers said.
Yields on the 10-year benchmark security closed at 6.87% on Monday, versus its previous close of 6.84% on Friday, CCIL data showed. Yields closed at 6.82% a week ago. The 10-year US bond yield shot up by nine basis points to 4.27% on Monday.
Trading hours were extended by 30 minutes on Monday, closing at 5:30 pm, due to a technical glitch on the NDS-OM trading platform, dealers said.
A rise in government bond yields increased borrowing costs across the economy as sovereign debt yields are the benchmarks for determining the price for corporate borrowing.
Speculation of Trump being reelected by markets is causing global risk aversion, rising the yields of bonds in the US.
“Markets are speculating Trump being reelected which will cause volatility and disruptions in the short run. Plus, after stronger than expected jobs data in the US, the possibility of another 25 basis point rate cut by the Fed has risen, causing the extra exuberance in yields to unwind,” said Vikas Goel, MD & CEO of PNB Gilts.
The US Federal Reserve delivered a 50 basis point rate cut in September, causing bond yields to soften. However, stronger than expected jobs data from the US has reduced the likelihood of another 50 basis point rate cut that the market was pricing in earlier, dealers said.
