Rate cut expectations, foreign demand boost govt bonds to 2016 highs

Sovereign Indian debt streaked ahead, sending benchmark yields to 30-month lows, amid growing expectations of deeper rate cuts by the Reserve Bank of India and increased foreign demand.

The yield on 10-year bonds declined nine basis points to 6.34 per cent on Tuesday after touching 6.31 per cent, the lowest for the notes since December 2016. Yields have slid more than 100 basis points since April-end amid bets the central bank may add to its three rate cuts this year. And negative-yielding debt in much of the developed world is adding to the allure of high-yielder like India, traders said.