Bond market turns combative for RBI; experts say market turning greedy

Dealers say RBI is behaving unreasonably by expecting them to accept low yields; experts say market turning greedy

The bond market and the Reserve Bank of India (RBI) have locked horns and are testing each other’s limits. 

The oversupply concern is definitely there, but the market participants, on their part, may have turned greedy. But the central bank, by trying to keep yields low and expecting the markets to accept that, is behaving a little unreasonably, say bond market participants.

The 10-year bond yield was below 6 per cent on February 11, but on February 18 when the central bank devolved more than Rs 20,000 crore in a Rs 31,000-crore bond auction, the yields shot up to 6.13 per cent.