India bonds extend weekly slide after RBI hike and hawkish stance shift
TLT•Indian government bonds fell for an eighth straight week as elevated oil prices and the RBI’s hawkish shift weighed on appetite. The 10-year yield rose 9 basis points this week to 7.2994%, after the RBI raised its repo rate by 25 basis points to 5.50%.
1. Yields rise for eighth week
The benchmark 6.94% 2036 bond ended Friday at a yield of 7.2994%, up from 7.2868% on Thursday. The yield rose 9 basis points this week, following a cumulative 45-basis-point increase over the previous seven weeks since August 17.
2. RBI and oil pressures
The RBI raised its repo rate by 25 basis points to 5.50% and shifted its stance to “calibrated tightening” from neutral, signalling the possibility of further hikes. Most economists now expect the terminal repo rate to reach at least 6.00%; Standard Chartered Bank and Goldman Sachs forecast 6.25%. Brent crude climbed above $105 a barrel this week before easing slightly, while India’s overnight indexed swap rates were broadly unchanged.
