From The Economic Times · Reuters · · 1m 40s
India's 10-Year Bond Posts Best Week in 7 Years
India's 10-year bond yield drops 22 bps weekly, leading emerging Asia as oil prices fall 17%.
In brief
India's 10-year bond yield drops 22 bps weekly, leading emerging Asia as oil prices fall 17%. India's 10-year bond yield fell 22 basis points this week, its strongest performance in 7 years, as oil prices dropped 17% following US midterm election results. Originally reported by The Economic Times.
Indian government bonds outperform
Indian government bonds outperformed emerging Asian peers this week, with the benchmark 10-year yield posting its steepest weekly drop since October 2019.
US election impacts oil prices
The election outcome rekindled hopes for a resolution to the Iran war, sending oil prices down 17% for the week, their sharpest slide since April 2020.
Cheaper crude benefits India
For India, the world's third-largest oil importer and consumer, cheaper crude can curb inflation and reduce pressure on government finances.
Rupee strengthens
It has also lifted the rupee, which strengthened past 94 per dollar on Friday and gained 1.1% over the week, easing pressure on the Reserve Bank of India to defend the currency.
Bond yield details
The yield on the benchmark 6.94% 2036 bond settled at 7.1898%, 2 basis points higher on the day but down 22 bps for the week, marking its strongest weekly showing since October 2019.
Foreign investment surge
Foreign investors also returned, buying nearly 52 billion rupees (about $552 million) of Indian bonds, their largest weekly net purchase since July.
RBI policy expectations shift
The collapse in crude has rapidly rewired expectations for RBI policy, blunting the case for front-loaded tightening with overnight indexed swap rates now pricing 50 to 75 basis points of rate increases.
The one thing
India's 10-year bond yield fell 22 basis points this week, its strongest performance in 7 years, as oil prices dropped 17% following US midterm election results.
