India's 5-year bond yield leads rise on RBI's cash withdrawal plan
MUMBAI: Indian government bond yields rose in early deals on Wednesday, led by an uptick in the five-year yield, as traders reacted to the central bank's plan to withdraw excess liquidity by holding a variable reverse repo auction.
The yield on the benchmark 10-year bond was at 6.2626% as of 10:20 a.m. IST, compared with Tuesday's close of 6.2504%.
The five-year 6.75% 2029 bond yield was at 6.0213%, up from the previous close of 5.9870%.
The Reserve Bank of India (RBI) said after market hours on Tuesday that it will conduct a seven-day variable reverse repo rate auction worth one trillion rupees ($11.64 billion) on Friday.
Earlier this month, Reuters reported that the RBI could start conducting these VRRR auctions to withdraw surplus liquidity as and when required.
'There will be more selling in the short-term papers,' a trader with a private bank said. 'If liquidity is sucked out, focus will shift from the short-end to long-end.'
India's banking system liquidity surplus has remained elevated throughout June despite tax outflows and has averaged 2.76 trillion rupees per day this month, comfortably above 1% of bank deposits.
India bonds end off lows as oil gives up most gains
The longer-dated bonds are likely to find support from lower US Treasury peers.
The 10-year US bond yield was at 4.30%, after hitting a seven-week low of 4.2850% on Tuesday.
Meanwhile, Iran and Israel seem to be holding up a fragile ceasefire brokered by US President Donald Trump, which is providing some comfort to the market.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
3 hours ago
- Business Recorder
Buying rally continues, KSE-100 settles with over 500 points gain
A day after gaining over 6,000 points, the buying rally continued at the Pakistan Stock Exchange (PSX), with the benchmark KSE-100 Index settling with a gain of over 500 points on Wednesday. Positive momentum persisted throughout the trading session, pushing the KSE-100 Index hit an intra-day high of 123,256.55. At close, the benchmark index settled at 122,761.64 level, an increase of 515.01 or 0.42%. On Tuesday, the PSX surged to a record high, driven largely by investor optimism following a ceasefire agreement between Iran and Israel. The benchmark KSE-100 Index rose significantly 6,079 points or 5.23%, settling at record level of 122,246 points. This marked the second-highest single-day increase in terms of points. Internationally, Asian stocks stabilised on Wednesday as crude oil hovered near multi-week lows, as a ceasefire between Israel and Iran buoyed sentiment, even as hostilities threatened to flare up again. The US dollar wallowed close to an almost four-year trough versus the euro with two-year U.S. Treasury yields sagging to 1 1/2-month lows as lower oil prices reduced the risk to bonds from an inflation shock. The shaky truce has so far held, although Israel says it will respond forcefully to Iranian missile strikes that came after US President Donald Trump had announced an end to the hostilities. In addition, US airstrikes did not destroy Iran's nuclear capability and only set it back by a few months, according to a preliminary U.S. intelligence assessment, contradicting Trump's earlier comments that Iran's nuclear programme had been 'obliterated'. Japan's Nikkei and Australia's stock benchmark were flat, while Taiwan's index gained 1%. Hong Kong's Hang Seng rose 0.6% and mainland Chinese blue chips eased 0.1%. US stock futures were little changed. An MSCI index of global stocks held steady after climbing to a record high overnight.
Business Recorder
8 hours ago
- Business Recorder
Copper edges higher on softer dollar, tentative Middle East truce
SINGAPORE: Copper prices on the London Metal Exchange and the Shanghai Futures Exchange edged higher on Wednesday, supported by a softer dollar and improved risk sentiment amid a tentative ceasefire between Iran and Israel. Three-month copper on the London Metal Exchange was up 0.18% at $9,686 per metric ton, as of 0101 GMT, while the most-traded copper contract on the Shanghai Futures Exchange held steady at 78,480 yuan ($10,945.45) a ton. The shaky truce has so far held, although Israel says it will respond forcefully to Iranian missile strikes that came after US President Donald Trump had announced an end to the hostilities. 'Traders and investors are waiting for some definite signals amid all the uncertainty, the Israel-Iran ceasefire may not be final, and US Federal Reserve Chair Jerome Powell's remarks on the interest rate cut have been neutral in tone,' a Beijing-based metals analyst from a futures company said on condition of anonymity. In addition, US airstrikes did not destroy Iran's nuclear capability and only set it back by a few months, according to a preliminary US intelligence assessment. The dollar weakened even after Powell said in testimony before the US Congress that he and many at the Fed expect inflation to start accelerating soon, and that the central bank was currently in no rush to ease borrowing costs. Copper gains on dollar dip but geopolitical, tariff uncertainty linger A softer US currency makes dollar-priced metals more attractive for buyers using other currencies. LME aluminium extended losses for a second consecutive day, down 0.52% at $2,565.5 a ton, and SHFE aluminium eased for the fifth day, down 0.34% at 20,260 yuan. LME zinc gained 0.26% to $2,688.5, lead grew 0.15% to $2,022, and nickel inched up 0.1% to $14,935. SHFE lead rose 0.95% to 17,090 yuan, nickel gained 0.42% to 117,720 yuan, while tin slipped 0.36% to 262,240 yuan.
Business Recorder
8 hours ago
- Business Recorder
Japan's Nikkei slips as US futures fall, investors eye Israel-Iran ceasefire
TOKYO: Japan's Nikkei share average inched lower on Wednesday, weighed down by declines in US stock futures, as investors awaited clarity on whether a fragile ceasefire between Israel and Iran would hold. The Nikkei was down 0.1% at 38,750.47 by the midday break, after flitting between modest gains and losses. The broader Topix fell 0.34% to 2,771.93. 'The market had already factored in the gains of US stocks last night subsequent to a ceasefire announcement,' said Naoki Fujiwara, senior fund manager at Shinkin Asset Management. The Nikkei snapped a three-day losing streak to end higher on Tuesday after US President Donald Trump announced the ceasefire agreement late Monday. The truce appeared fragile: Both Israel and Iran took hours to acknowledge they had accepted the ceasefire and accused each other of violating it. Still, investors viewed the ceasefire rhetoric as a sign of de-escalating tensions, pushing the US stocks up more than 1% overnight. But S&P and Nasdaq futures slipped during Asian hours, which the market interpreted as a sign of potential declines on Wall Street later in the day, said Kentaro Hayashi, senior strategist at Daiwa Securities. 'Investor sentiment was also weighed by the stability of Japanese politics ahead of the upper house election (next month), and the development of ongoing trade talks. If the US Federal Reserve cuts interest rates, that could lift the yen higher,' he added. Technology investor SoftBank Group fell 3.18% to drag the Nikkei the most. Medical equipment maker Olympus tanked 10.99%. Shares of Toyota Motor lost 1.41%. Chip-related stocks advanced, tracking a 3.8% gain in the US Philadelphia Semiconductor Index. Tokyo Electron climbed 2.34% and Advantest added 1.31%. Of more than 1,600 stocks trading on the Tokyo Stock Exchange's prime market, 27% rose and 68% dropped, while 4% traded flat.
