Government bonds hit their lowest in two months on Monday as fears over military tensions in Ukraine hit emerging markets and sent global crude prices surging, raising concerns about imported inflation.
“The current market conditions including liquidity is fairly comfortable, but traders are playing cautiously. We could see the 10-year yield rise towards 8.95% over this week amid broadly rangebound trade,” said Harish Agarwal, a fixed income trader with First Rand Bank. The benchmark 10-year bond yield closed up 4 basis points at 8.90% after rising to 8.93%, its highest since December 27.
Emerging markets were hit on Monday as fears that war would break out between Russia and Ukraine sent the rupee down the most in nearly two weeks and domestic shares to their first loss in six sessions. In the overnight indexed swap market, the benchmark five-year swap rate closed 4 bps higher at 8.58 percent while the 1-year rate ended up 3 bps at 8.69%.