Indian bonds jump as traders lap up debt after Israel-Iran ceasefire
The
yield
on the benchmark 10-year bond ended over 5 basis points lower at 6.2504%, the sharpest decline since May 13. The five-year 6.75% 2029
bond yield
was at 5.9870%, versus its previous close of 6.0304%.
Yields move inversely to bond prices.
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Indian bonds jump as traders lap up debt after Israel-Iran ceasefire
An Israel-Iran ceasefire and the ensuing slump in oil prices boosted Indian government bonds on Tuesday, as traders resumed buying and covered short positions.
De-escalation of Iran-Israel conflict pushes oil down, aids India bond bulls
Hero FinCorp plans first offshore bond issuance to raise $300 million
L&T lists India's 1st ESG bonds on NSE, raises Rs 500 crore
Indian rupee, bonds under pressure as US strike on Iran deepens Middle East conflict
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U.S. President
Donald Trump
announced on Monday a ceasefire between Israel and Iran. Both Israel and Iran confirmed the ceasefire, but reports of a violation hours later raised some doubts about the truce.
Still, global markets were largely relieved by the prospect of an end to the 12-day war.
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Brent crude was down nearly 2.7% at $69.52 per barrel in Asian hours, after easing over 7% on Monday.
"The tensions are dying down after the ceasefire," said Gopal Tripathi, head of treasury and
capital
markets at
Jana Small Finance Bank
.
"Commodity prices are also cooling down, so local factors like
demand
and supply should take precedence now."
He expects the yield on the new 10-year bond to be rangebound between 6.20% and 6.30% in the near term.
Meanwhile, India's banking system
liquidity
surplus shrunk to its lowest in three weeks due to tax outflows.
The surplus was at 2.44 trillion rupees($511.50 billion) on Monday.
RATES
The Indian overnight index swap (OIS) rates declined across tenors on Tuesday, in line with government bond yields.
Traders recommended receiving the most liquid 5-year OIS rate, with a view that the rate could extend its slide if oil prices fell further.
The one-year OIS rate ended 4 basis points lower at 5.48% and the two-year OIS rate fell by 6 basis points to 5.47%.
The liquid five-year dropped 8 basis points to 5.67%. ($1 = 86.0220 Indian rupees)
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