From mint · Pranati Deva · · 1m 20s
RBI Rate Hike Expected as Indian Bond Yields Rise
RBI may raise repo rate by 50-75 basis points in October amid inflation risks.
In brief
RBI may raise repo rate by 50-75 basis points in October amid inflation risks. RBI is expected to hike repo rates by 50-75 basis points in October to address rising inflation from higher food and oil prices. Originally reported by mint.
October Bond Yields Rise
Indian bond yields rose 30 basis points in September to 7.20% from 6.6% at year start.
“the domestic 10-year yield rose around 30 basis points in september to approximately 7.20%”
Global Bond Yields Track India
US 10-year Treasury yield rose 53 basis points to 5.22% in September.
“the us 10-year treasury yield rising around 53 basis points to 5.22%”
RBI Policy Shift Expected
RBI expected to raise repo rate by 50-75 basis points amid inflation risks from food and oil prices.
“rbi is expected to raise the repo rate by 50-75 basis points amid inflation risks”
US-Iran Tensions Impact
US-Iran tensions kept oil prices above $100 per barrel through September.
“tensions between the us and iran continued to simmer through september keeping oil prices firmly above us$100 per barrel”
Bond Market Pressure
Indian debt market likely to move sideways under pressure with gradual parallel upward shift.
“the indian debt market is likely to move sideways under pressure with a gradual parallel upward shift”
Short-Term Bond Strategy
Shorter-tenure corporate bonds offer better risk-reward opportunities for current market conditions.
“shorter-tenure corporate bonds may offer better risk-reward opportunities”
RBI Liquidity Management
RBI to use OMO sales and sell-buy swaps to manage surplus liquidity.
“the rbi expects to rely on a combination of omo sales and sell-buy swaps to manage surplus liquidity”
Foreign Portfolio Support
Foreign portfolio investors net purchased $5.5 billion in indian bonds this year.
“foreign portfolio investors have remained a source of support with net purchases during the year so far standing at us$5.5 billion”
October Yield Forecast
Indian 10-year benchmark expected to trade between 7.05% and 7.20% in October.
“the 10-year benchmark to trade between 7.05% and 7.20%”
RBI Rate Hike Timeline
RBI repo rate hike expected by next year to address inflation and support currency.
“the rbi expects the repo rate to rise by 50 to 75 basis points by next year”
In short
RBI is expected to hike repo rates by 50-75 basis points in October to address rising inflation from higher food and oil prices.
