The yield on the benchmark 10-year note ended at 6.5345% after settling at 6.5357% on Thursday. It rose 2 basis points for the week, which had only three trading sessions on account of local holidays.
Bond yields rise when prices fall.
Indian government bonds ended little changed, recovering from intraday declines, but posted a weekly drop on Friday as thin trading volumes encouraged short-sellers, while investors largely stayed away on interest rate uncertainty.
“Bears are pushing their luck and were able to hit 6.56%, but fundamentally, these are still decent levels to enter, and from Monday, we could see some reversal,” a trader with a state-run bank said.
Traders sold debt on expectations of a India-U.S. trade deal to lower the current 50% tariffs on Indian goods, dampening expectations of any large central bank rate cuts.
Reuters reported that Indian refiners were likely to slash Russian oil imports to comply with new U.S. sanctions, removing a major obstacle to a deal.India’s central bank also noted in its monthly bulletin that the global economy was in flux and presented considerable challenges to the global macroeconomic outlook, and that the Indian economy was not immune.Meanwhile, banking liquidity slipped into deficit for the second time in a month, pushing up overnight rates.
“System liquidity reduced temporarily and we expect the situation to improve on government spending and planned implementation of 50 bps of CRR (cash reserve ratio) cuts in November. RBI is also providing liquidity through regular fine-tuning operations,” said Anurag Mittal, head of fixed income, UTI Mutual Fund.
RATES
India’s overnight index swap (OIS) rates were marginally lower, after heavy paying witnessed on Thursday.
The one-year OIS rate ended at 5.46%, while the two-year OIS rate closed at 5.40%. The five-year swap rate dipped 2 bps to 5.65%. ($1 = 87.8950 Indian rupees)

