Market was in a big shock yesterday when the Treasury bill auction of Rs 11,000 crore was rejected, which basically means that liquidity in the system has increased by Rs 11,000 crore.
The range for the 10-year yield is seen between 7.52-7.55 percent, says NS Venkatesh, IDBI Bank.
The current global chaos is impacting not just Indian equity market but also bonds and currency. While equity investors are familiar with volatility, fixed income investors however are caught unaware, especially after a smart rally in last one year. Read this space to know how the current market volatility is impacting fixed income instruments.
The bonds will shortly find takers in banks and mutual funds, says Ananth Narayan, Co-Head of Wholesale Bank, South Asia, Standard Chartered Bank.
The range for the 10-year yield is seen between 7.25-7.30 percent, says Sandeep Bagla, ICICI Securities Primary Dealership.
With global bond markets swooning on the hint that the US might slow its money-printing operations, G8 leaders know the world economy remains a dangerous place.
SEBI raised the investment limits for FIIs in government bonds to USD 30 billion as a measure to prevent foreign funds from pulling out over USD 3 billion from the debt market.
Asian bond traders have been worried about a sharp selloff since late May that could turn into a rout. The market's low loquidity could also create a more explosive selloff leading to a price vacuum and declines.
Gandotra does not expect Fed to start tapering soon because it would damage their bond yields and economic recovery. Therefore, the emerging market currencies could also see a pullback. Moreover, he does not see the rupee depreciating to the level of 60/USD.
As Japanese economy seeks its revival, monetary policies announced in April have sent Japanese government bonds in a complete volatile state and made hedge funds bet on a bust.
QE to me is an act of desperation, all the interest rates are brought down to zero. However it is not producing results because people are not borrowing money, says Richard Koo, chief economist, Nomura.
GDP numbers later this month will be the key factor for the bond market, says Ashok Gautam, Axis Bank.
Amit Trivedi of Co-Founder of Investworks.in expects markets to head higher but cautions of significant increase in volatility going forward.
"We are looking at between 7-7.25 percent in the 10-year bond pretty soon," Ananth Narayan of StanChart Bank says.
Amid supply pressures and after RBI's cautious guidance, bonds are unlikely to rally in a hurry, says Vivek Rajpal, Nomura.
The bar is low for the April jobs report. The government`s monthly employment report is expected to show improvement over March but still deliver a fairly weak picture of job growth when it is released Friday at 8:30 a.m. ET
The change in withholding tax to 5 percent from 20 percent is going to be a game changer for the bond markets, says Jayesh Mehta, managing director & country treasurer, Bank of America.
The Bank of Japan`s recent radical shift in monetary policy that targets an inflation rate of 2 percent in the next two years could back fire and spark a crisis in the country`s bond market, according to one expert.
The wave of position building is expected to carry forward into this week as the bond market expects a 25 bps rate cut in May, says Ajay Manglunia, Edelweiss.
As various economic data points are expected over next 2 weeks, the bond market may see an increased chance of rate cut heading into the RBI's Policy on May 3, says Vivek Rajpal, Nomura.
With caution surrounding the first G-sec auction for FY14 out of the way, the bond market is likely to be better prepared for the upcoming stream of paper supply, says Ajay Manglunia, Edelweiss.
The bond market is likely to be cautious ahead of IIP and inflation later this week, says Ajay Manglunia, Edelweiss.
Telecom major Bharti Airtel today hit the overseas bond market to raise a minimum of USD 500 million, said merchant banking sources who are advising on the sale.
Companies raising funds through corporate bonds may have to pay higher cost of money. Reason: low investor appetite but more than adequate supply of bonds. Consequently, prices of those securities remain low even though sovereign papers are available at a higher price. Bond prices fall when yields rise and vise-a-versa.
The bond market will closely watch out for the Wpi inflation number today. I expect it to come in at 7%, says Sandeep Bagla, ICICI Securities.