Bond yields traded lower on Tuesday as India’s inflation based on wholesale price index (WPI) jumped to 14.23% in the month of November as against 12.54% in October. The annual rate of inflation is 14.23% (Provisional) for the month of November 2021 as compared to 2.29% in November 2020. The high rate of inflation in November 2021 is primarily due to rise in prices of mineral oils, basic metals, crude petroleum & natural gas, chemicals and chemical products, food products etc as compared to the corresponding month of the previous year.
In the global market, the benchmark U.S. 10-year Treasury yield fell on Monday and the yield curve flattened as traders jockeyed for position ahead of an expected hawkish tone out of the Federal Reserve later this week. Furthermore, Oil prices edged higher but price gains were capped due to investor worries about oil demand after renewed restrictions were imposed in Europe and Asia amid a rise in coronavirus cases.
Back home, the yields on new 10 year Government Stock were trading 2 basis points lower at 6.35% from its previous close of 6.37% on Monday.
The benchmark five-year interest rates were trading flat with its previous close of 5.71% on Monday.