Bond market ko gussa kyun aata hai

Normally, the market eats out of the RBI Governor's hands but the size of the govt borrowing is killing its risk appetite

The Monetary Policy Committee (MPC), the rate-setting body of the Indian central bank, did everything it could on Monday but the bond market was not convinced. The prices of government bonds, across maturities, dropped and the yield rose till the Reserve Bank of India (RBI) rejected all bids for the five-year and 10-year papers (Rs 11,000 crore each). The auction of the other two papers — of two-year and 40-year maturity — almost entirely devolved on the primary dealers, the intermediaries that buy and sell government securities.

Following this, the 10-year paper yield, which rose quite a bit during the day,