Mumbai: Yields on the 10-year benchmark bond increased 5 basis points from their previous close due to high oil prices to their weakest level since March 2023. The 10-year yield closed at 7.44%, a three-and-a-half year high, versus its previous close of 7.39%, CCIL data showed.
Separately, the Reserve Bank of India rejected all bids at the treasury bill auction on Wednesday amid a rise in short term yields. The government had planned to raise ₹23,000 crores through the sale of 91-day, 182-day and 364-day treasury bills. Traders said the cutoff yields likely came in above the central bank’s comfort level. The last time RBI cancelled a t-bill auction was in early June.
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“High oil prices, global yield pressure, FII selling and global fundamentals, nothing is working in our favour right now. The market is clearly signalling a 50 basis point hike in December, it is also seen from RBIs action in the T-bill auction today,” said Anshul Chandak, head of treasury, RBL Bank.
The benchmark Brent crude stayed above $110 per barrel after nearing $112 on Tuesday, its highest in five months. Indian markets were shut on Tuesday for Dussehra. Oil prices were at $107 per barrel when Indian markets closed on Monday.
High oil prices stoke inflation concerns, adding pressure on local currency and bonds, as India is a net importer of the commodity.
In the T-bill auction, banks bid at yields at least 15 basis points higher than in the previous week’s auction, a trader at a large state-run bank said.
