Bond yields rise to over 5-month high

The yield on the 10-year benchmark bond ended at 8.03% compared with previous close of 7.97%.

The rise in government bond yields continued for a second trading day tracking rise in US bond yields.

The yield on the 10-year benchmark bond ended at 8.03 per cent, compared with the previous close of 7.97 per cent. Since the start of this month, the yield has risen by 21 basis points. The yield on the 10-year benchmark bond had ended at 8.06 per cent on December 1, 2014.

The yield on the new 10-year bond, on the other hand, ended at 7.83 per cent compared with previous close of 7.79 per cent. Since the start of this month, the yield has risen 19 basis points.

“Bond yields have been rising because US treasury yields are also rising. Traders have been selling bonds. Yields are expected to stay elevated in the near future,” said the head of treasury of a large state-run bank.

Since the start of this month, the 10-year US generic bond yield has risen by 35 basis points so far this month, while foreign institutional investors have been net sellers in Indian debt by Rs 3,842 crore.

There are concerns that the US Federal Reserve could start raising interest rates sooner than expected. If that happens, outflows could increase from debt and equity from emerging markets.