10-Year Govt Bond Yields Hold Steady At 7.17 Per Cent; Check Bond Market Outlook

In a month that commenced with a 4-month low, Indian government bond yields remained stable at the same level as last week’s yield. As of January 27, 2024, the benchmark 10-year yield stands at 7.17 per cent, consistent with the previous week's figures. The domestic mutual fund industry saw its corporate bond holdings, over the past five years stagnate, a report from Business Standard released today said. Actively managed debt funds, managing Rs 6.73 lakh crore at the end of April 2019, saw a 9 per cent growth in assets, reaching Rs 7.3 trillion last month.

The Indian government announced that it will raise Rs 33,000 crore through bond sales, including Rs 16,000 crore from 10-year bonds. Meanwhile, 12 state governments plan to auction securities worth Rs 26,211 crore via the RBI Core Banking Solution on January 30, 2024.

According to a report from HSBC Asset Management released this week, Indian bonds are likely to attract about USD 100 billion of foreign inflows in the coming years, lured by the JM global bond index inclusion.

Bond market experts continue highlighting that the rate hikes have peaked, signalling an imminent rate-cutting cycle amidst inflation cooling down with slower global growth.

Treasury And Bond Yields

The indicative yield for T-bills stands at 7.02 per cent, 7.19 per cent, and 7.17 per cent for three-month, six-month, and 364-day durations, respectively. In the 1-2 year tenure, the 7.72% GS 2025 show a yield of 6.96 per cent.

Moving on to longer tenures, both the 7.37% GS 2028 (4-5 year tenure) and the 7.18% GS 2033 (9-10 year range) show yields of 7.04 and 7.17 per cent, respectively.

Among BRICS Nations, at the end of December 2023, the highest 10-year government bond yield was observed in Russia (12.3 per cent), followed by S Africa (11.4 per cent), Brazil (10.4 per cent), India (7.2 per cent) and China (2.6 per cent)

Several bonds have been issued by Indian banks for capital needs following the Reserve Bank of India's increase in risk weightage on consumer credit, and the trend continued also during the week. The Bank of Baroda infrastructure bond issue got a huge investor response on January 24, 2023. Out of the total issue size of 5000 crore, the bank received total bids of Rs 14,950 crs.