Bond yields traded higher as investors were disappointed with the RBI’s status quo stance in its monetary policy review. Sentiments weakened further with Moody’s Investors Service’s report that RBI’s target to bring down retail inflation at 5 per cent by March 2017 will face some risks from monsoon uncertainty and execution of seventh Pay Panel recommendations, while macro-economic factors will be critical for sustaining growth.
In the global markets, U.S. Treasury yields fell to nine-month lows on Tuesday as oil prices resumed their slide, boosting demand for safe haven bonds, and on concerns about slowing U.S. economic growth before a closely watched employment report on Friday. Furthermore, Oil futures extended losses into a third session in Asian trade on Wednesday, as U.S. crude stocks last week surged to more than half a billion barrels and as Iran plans to boost exports from March.
Back home, the yields on new 10 year Government Stock were trading 2 basis points higher at 7.86% from its previous close at 7.84% on Tuesday.
The benchmark five-year interest rates were trading flat from its previous close at 7.68% on Tuesday.