Explained: Why bond yields are rising, and what it means for markets and investors | Explained News,The Indian Express

With the Reserve Bank of India hiking rates to rein in inflation, bond yields have risen to their highest levels in three years. What does that mean for the markets and investors?

With the Reserve Bank of India hiking rates to rein in inflation, which is expected to remain above 7% until at least September, bond yields have risen to their highest levels in three years. What does that mean for the markets and investors?

The big jump

The yield on benchmark 10-year government bonds has shot up by 149 basis points to 7.50% in the last one year. Since the start of the year, long-term yields have risen by over 100 bps, and short-term yields by over 150 bps.

Bond yields have been rising across the world amid higher inflation and plans for policy normalisation. Seeing the writing on the wall, buyers of government bonds have been demanding higher yields. “Data showing further increase in inflation leading to higher-for-longer inflation expectations may result in further increase in bond yields and correction in markets. We expect inflation in India to trend down sharply in the second half of FY23 on high base effects but note upside risks to inflation from higher-than-expected domestic food prices and global fuel prices,” said a report from Kotak Securities.

What it means

https://indianexpress.com/article/explained/why-bond-yields-are-rising-and-what-means-markets-investors-7961340/


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