On 26th May 23, 7.17% GS 20230, 7.41% GS 2036, 7.40% GS 2062 action cut-off yield stood at 7%, 7.09% and 7.17% respectively. It can be noted here that the 7.40% GS 2062 auction yield stood at 7.38%. It shows there has been a fall of 21 bps that signifies the bullish nature of government bond yield during current fiscal year.
In the same line, 10-year SDL auction cut-off came down to 7.34% from 7.71% during FY24.
As domestic inflation continues to fall, the possibility of RBI’s status quo on repo rate has increased which is the primary factor behind the fall in auction yield. In addition to it, system liquidity has regained the surplus zone. Global central banks have also indicated pause in rate hikes.
Therefore, considering the current economic scenario, the bullish trend of g-sec auction is expected to continue in near future.
Government bonds, SDL and OIS yield movements
On a weekly basis, the 10-year benchmark 7.26% 2033 yield stood unchanged at 7.01% while 7.26% 2032 yield stood flat at 7.05%. 7.06% 2028 yield came down by 2 bps to 6.93%. 5.63% 2026 yield lost 1 bp to 6.86%. Long-term paper, 7.40% 2062 yield stood at 7.15%.
The spread of 10-year bond over 5-year bond increased to 8 bps from 6 bps as compared to the previous week. The 15-year benchmark over 10-year benchmark flat at 8 bps while the 30-year benchmark over 10-year benchmark spread stood unchanged at 14 bps on a weekly basis.
10-yr SDL auction cut-off yield declined to 7.34% from 7.37% in previous week while spread decreased to 35 bps from 41 bps as compared to previous week.
On a weekly basis, 1-year OIS yield rose by 1 bp to 6.56% while the 5-year OIS yield increased by 13 bps to 6.08%.
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