Bond yield rises over 3-month high ahead of RBI MPC meeting minutes

Representative image.

The yield on the 10-year benchmark government securities surpassed the three-month high during the afternoon trade on uncertainty ahead of the release of the Reserve Bank of India’s (RBI) February meeting minutes.

The 10-year benchmark bond 7.26 percent 2032 yield touched 7.4384 percent during afternoon trade and then eased to 7.4298 percent. The yield closed at 7.3884 percent in the previous trading session.

The last time the yield on benchmark bond crossed 7.43 percent was on November 4, 2022, when it touched 7.4691 percent.

Bond yields and prices move in opposite directions.

“Traders are selling in the market on caution ahead of RBI minutes,” a dealer with a state-owned bank said.

On February 22, the RBI is set to release the minutes of its February monetary policy (MPC) meeting and investors are keeping a close watch on them for cues on the trajectory of rate hikes.

The minutes will give some clarity on the RBI's future rate hike trajectory.

Further, traders are also awaiting the RBI Deputy Governor Michael Patra's speech at the first G20 Finance Ministers and Central Bank Governors meeting and the second G20 Finance and Central Bank Deputies meeting for any clues on potential rate hikes.

In the last few days, bond yields have been under pressure after the central bank in the weekly bond auction partially devolved 7.26 percent 2033 government bonds on primary dealers (PD) at weekly bond auction due to lower demand from investors.

The central bank devolved Rs 8,254.377 crore of the 7.26 percent 2033 bonds on PDs, out of the total Rs 12,000 crore that was planned to be raised.