Bond yields edged higher on Wednesday, on account of lower demand from corporates and banks. Traders remained concerned on report that the Reserve Bank of India (RBI) is unlikely to reduce key policy rates in 2018 despite a dip in retail inflation in February. Risks like the higher minimum support prices (MSPs) for food grains promised in the budget, according to them, can push up the inflation in the next fiscal year.
In the global market, the U.S. yield curve flattened on Tuesday as longer-dated bonds fell on strong demand for 30-year securities at auction, and on earlier news that February consumer price data cooled, suggesting the anticipated pickup in inflation is likely to be gradual. Furthermore, oil prices edged up after posting two days of declines at the start of the week.
Back home, the yields on new 10 year Government Stock were trading 1 basis point higher at 7.67% from its previous close of 7.66% on Tuesday.
The benchmark five-year interest rates were trading 1 basis point higher at 7.44% from its previous close of 7.43% on Tuesday.