Ceasefire, RBI policy cool bond yields by 0.15 pc to slip below 7 pc

Mumbai, Apr 8 (PTI) Indian bond yields ended nearly 0.15 per cent lower on Wednesday, taking comfort from the conditional ceasefire in the West Asia conflict, and Reserve Bank of India (RBI) maintaining the status quo on policy rate.

According to the Clearing Corporation of India (CCIL), the 10-year benchmark bond yield ended 6.8984 per cent compared to 7.0443 per cent at the previous close.

Even though bond yields have eased, the central bank, in the monetary policy report, has projected 10-year bond yield at 7 per cent for FY27, and 6.9 per cent in FY28 against 6.8 per cent in FY26.

The major comfort for bond yields came from the sharp easing in the Brent crude oil prices in the international market after the conditional two-week ceasefire between

Iran and US.

Following the ceasefire, Brent crude oil prices crashed 15 per cent to USD 92.78 per barrel. This helped improve the sentiments of bond traders in India because lower rate reduces the risk of imported inflation, and reduces the pressure on the local currency amid less demand for dollars.

The ceasefire in the West Asia conflict is conditional for two weeks, during which shipping traffic will be allowed through the Strait of Hormuz. This came after a more than month after the US and Israel launched co-ordinated attacks on Iran, and hours after President Donald Trump threatened that “a whole civilisation will die tonight”.

Additionally, the status quo on the policy rate has also helped bond yields to lower marginally, experts said.

“With respect to the shape of yield curves, the government bond curve has started steepening again, reflecting relief on any sort of policy rate hike expectations,” said Suyash Choudhary, CIO-Fixed Income, Bandhan AMC.

The central bank’s six-member Monetary Policy Committee voted unanimously to keep the benchmark repurchase rate unchanged at 5.25 per cent, flagging heightened uncertainty after the West Asia conflict drove crude prices sharply higher, weakened the rupee and disrupted trade flows. PTI MSU AA BAL BAL BAL