 "Bonds, Govt bond")
Government bond yields surged on Thursday, tracking the rise in US Treasury yields, dealers said. The demand at the weekly bond auction was weaker than market expectations, which further aided yields.
The yield on the benchmark 10-year bond settled at 7.24 per cent, against 7.17 per cent on Wednesday.
“The major reason was the rise in US yields,” a dealer at a state-owned bank said. “Apart from that, the cut-offs (price) of the auction were a little lower than expectations," he added.
Prices and yields move inversely.
The Reserve Bank of India (RBI) set the cut-off yield on 3-year, 7-year, 14-year, and 30-year at 7.28 per cent, 7.26 per cent, 7.35 per cent, and 7.46 per cent, respectively.
The yield on the benchmark 10-year US Treasury yield rose to a 16-year high after members of the US Federal Reserve commented that there might be a possibility of resuming interest rate hikes.
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The 10-year US Treasury yield was trading at 4.64 per cent at the time of the close of Indian markets.
Market participants observed a reduced activity in the market on Thursday on account of it being the penultimate day of the quarter.
"The mutual funds were absent from the market today. There was a lack of participants because it is the end of the quarter. People might have already concluded their books and don't want to add anything," a dealer at another state-owned bank said. "Also, there was confusion over the holiday," he added.
In a late evening release on Wednesday, the RBI said the markets will remain open on Thursday and Friday.
