As per interim Union Budget 2024-25, fiscal deficit has been pegged at 5.1% for FY25 while for FY24, it has been revised to 5.8% from 5.9% as budgeted earlier. For FY25, Gross market borrowing and net market borrowing have been budgeted at Rs 14.13 trillion as compared to Rs 15.45 billion in FY24. Due to a reduced availability of gilt securities in the upcoming fiscal year, we can anticipate an increase in g-sec prices and a corresponding decrease in g-sec yields.
Government bonds, SDL and OIS yield movements
During the past week, there were several notable changes in bond yields:
The yield for the 10-year benchmark 7.18% 2033 bond yield came down by 1 bps to 7.05%. The 7.06% 2028 bond's yield lost 7 basis points to 6.98%. 7.18% 2037 bond yield declined by 17 bps to 7.10%. The long-term paper, represented by the 7.25% 2063 bond, its yield decreased by 17 bps to 7.16%.
The spread between the 10-year and 5-year bonds declined to 4 bps from 12 basis points as compared to the previous week. The spread between the 15-year benchmark and the 10-year benchmark decreased to 5 bps from 10 bps. Additionally, the spread between the 30-year benchmark and the 10-year benchmark declined to 11 bps from 16 bps as compared to the previous week.
Lastly, in the Overnight Indexed Swap (OIS) rates, the 1-year OIS yield declined by 5 bps to 6.57%, while the 5-year OIS yield decreased by 7 bps to 6.11%.
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