10-year bond yield softens to 6.85%, a 28-month low

MUMBAI: Monday’s weakness in the stock market forced investors to look for safe haven assets like bonds which led to a rally in

gilt prices

. As a result, as bond prices rallied the

benchmark

10-year

bond yield

fell below the 6.85 per cent level, its lowest mark in more than two years. The govt bonds with a

coupon

of 7.1 per cent that would mature in 2034 opened Monday’s trading at 6.86 per cent yield, touched a low at 6.84 per cent and closed at 6.86 per cent.

According to Ramkamal Samanta of Star Union Dai ichi Life Insurance, favourable demand-supply dynamics, comfortable liquidity and meaningful softening of the global fixed income yield have helped the Indian 10-year benchmark yield to touch 6.85 per cent mark after a gap of 28 months. In the interim Budget as well as the full-fledged Budget, the govt said that it planned to borrow less in the current fiscal (Rs 14.01 lakh crore) than how much it did the previous fiscal (Rs 14.13 lakh crore). This ensured less supply of gilts in the market, helping the yields to soften.