Easy liquidity and expectations of a bank rate cut led the benchmark 10-year gilt to breach the psychological yield of six per cent on Thursday to touch 5.978 per cent.
During this week, yields on the 10-year gilt has come off by around 15 basis points. Yields on corporate bonds, too, declined by about 30-40 basis points. With the easing of liquidity market interest returned to the longer-dated gilts.
The yield on the 8.35 per cent 2022 gilt softened by about 20 basis points last week. With advance tax flows returning to the banking system and government departments exhausting their allocated budget for 2002-03, the liquidity situation turned comfortable.
A testimony to this is the fact that on each of the four days that the Reserve Bank of India
