Shorter-tenor bonds poised to extend losses amid hawkish RBI bets

Shorter-maturity Indian bonds are poised to extend losses amid growing expectations the central bank will accelerate its policy normalization as the economic revival gains traction. 

Rates on notes with maturities of up to two years climbed in recent weeks as the central bank expanded its efforts to remove excess liquidity from the banking system, with the one-year bill yield rising to the highest since April 2020. The benchmark 10-year bond yield, on the other hand, has seen smaller gains. 

Money-market rates and yields on shorter-maturity debt are likely to rise further as traders expect the Reserve Bank of India to