Bond yields edged higher on Friday even after Moody's Investors Service said a combination of weak growth in advanced economies, persistent inflationary pressures, the Russia-Ukraine conflict, tight financial conditions, and a subdued growth outlook for China will create a difficult environment for emerging markets (EM) in 2023. As regards India, Moody's said food and fuel remain the main drivers of inflation because they represent a larger share of the consumption basket. For example, rising food prices have contributed to almost half of the growth in headline inflation this year in India.
In the global market, U.S. Treasury yields tumbled as Treasury yields rose after the suggestion the Federal Reserve wasn’t close to ending its interest rate increases to stop inflation. Furthermore, oil prices plummeted on a series of bearish market forces, led by thin liquidity and easing geopolitical tensions between Russia and the West when it became clear that the missile striking Poland earlier in the week did not come from Russia.
Back home, the yields on new 10 year Government Stock were trading 1 basis point higher at 7.29% from its previous close of 7.28% on Thursday.
The benchmark five-year interest rates were trading 2 basis points higher at 7.16% from its previous close of 7.14% on Thursday.