Bond yields traded lower on Tuesday after Fitch Ratings said that the Reserve Bank is likely to raise interest rates further to 5.9 per cent by December 2022, on deteriorating inflation outlook. Fitch said India's economy faces a worsening external environment, elevated commodity prices, and tighter global monetary policy.
In the global market, benchmark 10-year Treasury yields hit their highest level since 2011 on Monday, and a key part of the yield curve inverted for the first time since April as investors braced for the prospect that the Federal Reserve’s attempts to stem soaring inflation will dent the economy. Furthermore, oil prices seesawed in positive and negative territory, holding up despite recession fears and potential new COVID-19 curbs in China that could dampen demand as the market remains tightly supplied.
Back home, the yields on new 10 year Government Stock were trading 2 basis point lower at 7.58% from its previous close of 7.60% on Monday.
The benchmark five-year interest rates were trading 1 basis point higher at 7.40% from its previous close of 7.39% on Monday.