G-Sec prices decline sharply

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Prices for government securities (G-Secs) fell sharply on Friday, tracking higher US Treasury yields. The lower lot price in the weekly G-Sec auctions also affected these bonds.

The 10-year G-Sec benchmark price (7.26 percent 2033 GS) closed 41 pounds, down at ₹ 100.975 ₹ 100.975 (previous close 101.385 dollars), with the yield up nearly 6 basis points to close at 7.1166 percent (7.0575 percent).

G-Sec’s 10-year yield, the most liquid paper on the market, closed at its highest level in nearly two months.

Bond prices and yields are inversely related and move in opposite directions.

US Treasury yields jumped as Federal Reserve Chairman Jerome Powell took a hawkish stance, indicating that he expects the moderate pace of interest rate decisions to continue.

Venkatakrishnan Srinivasan, founder and managing director of Rockfort Fincap, attributed the rise in G-Sec yields to a combination of factors, including US Treasury yields which are stiffening on expectations that the US Federal Reserve will resume raising interest rates, a large overall government borrowing program, and borrowing states more. In the first quarter compared to the previous quarter.

Referring to RBI Governor Shaktikanta Das’s emphasis on the need to move towards the MPC’s primary target of 4 per cent inflation, he said the central bank would be vigilant to the monsoon path and inflation, which would have an impact on the future repurchase rate decision and how Bond yields are moving.

Three G-Secs’ weekly auction sailed, with the government raising Rs 33,000 crore in higher returns.

It raised Rs 14,000 crores by selling the 10-year G-Sec standard at a yield of 7.1058 per cent (Price INR 101.05). The previous closing yield for this note was 7.0575 per cent (Price Rs. 101,385).

The government disposed of Rs 11,000 crore by selling a 30-year G-Sec (7.30 per cent GS 2053) with a yield of 7.3678 per cent (Price Rs 99.18). The previous closing yield for this paper was 7.3121 percent (Price INR 99.85).

It raised Rs 8,000 crore by selling a 5-year G-Sec (7.06 per cent GS 2028) with a yield of 7.0712 per cent (Price Rs 99.94). The previous close yield for this paper was 7.0175 per cent (Price INR 100.155).