RBI's 'Operation Twist' promise drags down long-term yields sharply

The 10-year bond yield fell 15 basis points (bps) on Friday, while that in the 14-year segment fell 20 bps, which according to bond market dealers helps the government borrow cheap provided the central bank continues to do such market intervention.

The 10-year bond yield closed at 6.604 per cent after the Reserve Bank of India (RBI) said it will buy 10-year benchmark bond, and sell four short-term bonds worth Rs 10,000 crore, on Monday.

If the central bank made it a one-off exercise, then the yields should climb back, the bond dealers said.

The yields on one-year bonds rose