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The RBI’s Rs 31,000-crore government securities auction on Friday partially devolved on bond underwriters amid rising global yields. This is the sixth time this year that primary dealers were called in to subscribe the securities in the absence of buyers.
According to the Reserve Bank of India (RBI), primary dealers bought Rs 19,400 crore of securities out of the Rs 31,000 crore the government offered at the weekly auction. Out of four maturities, the cut-off price of 5.85 per cent government stock 2030 was at 6.2225 per cent. The yield on 10-year benchmark bond rose two basis points to 6.23 per cent on Friday.
On the other hand, the yield on 10-year US Treasury climbed above 1.5 per cent to as high as 1.5727 per cent, but still below a one-year high of 1.614 per cent struck last week.
The US yield curve, a measure of economic expectations, steepened on rising yields, with the gap between two- and 10-year yields widening by another 6.3 basis points overnight, analysts said.
Meanwhile, the benchmark Sensex plunged 441 points to 50,405.32 on Friday on weak global cues and rising US bond yields. US Treasury yields again rattled equity investors while hoisting the dollar to a three-month high, which in turn dragged the Japanese yen to an eight-month trough.
Global markets have become nervous about a rise in inflation led by industrial commodities like copper and steel, crude oil and agri commodities in the last few days.
