Bond yields drop as RBI seen reversing Covid period rate cut

The yield on the 10-year benchmark government bond fell almost 9 bps to end the day at 7.21 per cent

Bond yields dropped by 9 bps on Wednesday after the market sensed that the Reserve Bank of India (RBI) may not be very aggressive with rate hikes and the terminal repo rate for this rate hike cycle could be around 5.15-5.25 per cent as compared to over 7 per cent seen earlier.

According to bond market participants, the monetary policy committee of the RBI is now expected to only reverse only the rate cut during the Covid-19 period, which was 115 bps. (100 bps = 1 percentage points)

The yield on the 10-year benchmark government bond fell almost 9 bps to end