Yields on the new 10-year benchmark 6.10%-2031 bonds rose just after the Reserve Bank of India (RBI) partially devolved the benchmark bonds on main dealers (PDs) at the weekly bond auction on Friday. The 10-year benchmark 6.10%-2031 bonds ended at Rs 99.52 or 6.1648% yield, 3 basis points larger than their prior close on Thursday. A basis point is one hundredth of one percentage point.
“Yields on the 10-year bond rose because the RBI partially devolved the benchmark bond and there was low demand in the market,” stated Mahendra Kumar Jajoo, chief investment officer- fixed earnings, Mirae Asset Investment Managers (India).
At Friday’s weekly bond auction, the central bank devolved Rs 11,144.145 crore on main dealers, and accepted only Rs 2,855.855 crore at Rs 99.6300 reduce off value or 6.1498% yield. The RBI accepted the green-shoe alternative of Rs 750 crore and Rs 2,250 crore on 4.26%-2023 and 6.76%-2061 bonds, respectively. The central bank has raised Rs 3,750 crore, compared to Rs 3,000 crore notified through 4.26%-2023 bonds at Rs one hundred.02 or 4.2453% yield, and Rs 11, 250 crore, as against Rs 9,000 crore notified through 6.76%-2061 bonds at Rs 94.39 or 7.1890% yield.
However, the devolvement on PDs at the auction on Friday did not influence most other bonds, but some ended larger marginally. The yields on 5.63%-2026 ended at 5.6864%, as against 5.6814% on Thursday.
“Other bonds did not react much after devolvement as market participants are expecting an OMO to be announced later today (Friday),” a dealer with a big state-owned bank stated. On Thursday, the yields on 10-year Treasury fell marginally on reduced than anticipated weekly jobless claim information. The US Treasury yields have been at 1.26%, which was two basis points reduced than it was closed on the prior trading session.
The initial jobless claims in the US was 419,000 as per the US Department of Labor, which was up from a revised 368,000 claims.