Tide turning for bonds after RBI's liquidity bonanza, signs of recovery

The expectations are for the 10-year yield to drop further to 5.75%, a level last seen in July, according to a median estimate of 15 traders surveyed by Bloomberg

India’s sovereign bonds are turning a corner as a supply overhang dissipates following a raft of liquidity measures from the central bank. Early signs of economic revival are also spurring hopes of an improvement in government finances.

The yield on India’s benchmark 10-year bond fell about 13 basis points over the past month to 5.9%, making it Asia’s best performer, with the bulk of its decline coming in after the Reserve Bank of India announced steps including doubling the size of its bond purchases in a policy address last week.

The expectations are for the 10-year yield to drop further to 5.75%,