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Inflationary trends drive 10-year government bond yields up 7 bps

At 9.45am, the 10-year bond yield was trading at 7.32%, up 8 basis points from its previous close of 7.26%. Bond yields and prices move in opposite directions

May 13, 2022 / 10:25 AM IST
Representative image

Representative image

The 10-year government bond yield rose 7 basis points on Friday after India's consumer price inflation hit nearly eight-year high, suggesting faster tightening by the Reserve Bank of India. Higher crude oil prices and US treasury yields also weighted on bonds.

At 9.45am, the 10-year bond yield was trading at 7.32 percent, up 8 basis points from its previous close of 7.26 percent. Bond yields and prices move in opposite directions.

India's CPI accelerated for a seventh month to the fastest since May 2014 on higher fuel and food cost, spurring expectations that the central bank will raise rates further to tame inflation. CPI increased 7.79 percent in April as against an estimate of 7.42 percent predicted in a Bloomberg survey of economists and 6.95 percent the previous month.

Food inflation rose to 8.1 percent in APril from 7.5 percent in March, despite a high base earlier. A measure of core inflation that includes transportation fuel rose to 7.3 percent in April from 6.5 percent in March.