Bond yields traded flat on Thursday after RBI Deputy Governor M Rajeshwar Rao said despite the improvement in asset quality, financial institutions, including banks, need to proactively undertake stress testing of loan books to examine their loss absorption limits and take steps to improve them wherever required.
In the global market, U.S. Treasury yields fell on Wednesday after the Federal Reserve raised its target interest rate by three-quarters of a percentage point, meeting market expectations that have rapidly ratcheted higher following a stronger-than-expected inflation reading on Friday. Furthermore, oil prices recovered from a steep drop in the previous session, supported by tight oil supply and peak summer consumption, after a U.S. rate hike sparked fears of slower economic growth and less fuel demand.
Back home, the yields on new 10 year Government Stock were trading flat with its previous close of 7.59% on Wednesday.
The benchmark five-year interest rates were trading 11 basis points higher at 7.50% from its previous close of 7.39% on Wednesday.