Bond yields inched higher on Thursday on speculation a rebound in oil prices will add to inflation and limit the central bank’s scope to cut interest rates. However, further slide of bond was limited after Retail inflation, as measured by the consumer price index (CPI), slowed to 5.17% year-on-year in March, lower compared to 5.37% in February and also lower than street expectation of figure of around 5.5%, confirmed the case for RBI slashing interest rates in its upcoming monetary policy review, which is on June 2.
On the global front, U.S. Treasury debt prices were little changed on Wednesday, after weaker than expected economic data earlier in the day added to bets that the Federal Reserve is likely to wait longer to raise interest rates. Brent crude oil hit 2015 highs above $63 per barrel on Thursday after a rally of more than 5 percent the previous session, and analysts said more price rises were likely despite market oversupply.
Back home, the yields on 10 year Government Stock was trading 1 basis point higher at 7.79% from its previous close of 7.78% on Wednesday.
The benchmark five year swap rate was trading 4 basis points higher at 7.10% from its previous close of 7.06% on Wednesday.