Bonds recoup losses after inflation shock as long-term players step in

After weakening sharply in early trade due to an unexpectedly high inflation reading, government bonds reversed most losses and ended steady as long-term investors stepped up purchases at what they considered to be lucrative yield levels, dealers said.

Yield on the 10-year benchmark bond closed at 7.37 per cent, versus 7.36 per cent at previous close. In the first hour of trade, yield on the bond had breached the psychologically significant 7.40 per cent level, climbing to a high of 7.41 per cent. Bond prices and yields move inversely.

Given that sovereign bonds are the benchmarks for pricing other credit