Price Pressure: Bonds spike on inflation discomfort

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June 19, 2021 8:03 AM

A surge in retail inflation reading this week revives debate among sovereign bond traders on how long the RBI could retain its dovish policy stance.

The RBI has been mandated by the government to keep retail inflation at 4 per cent with a margin of 2 per cent on the either side.The RBI has been mandated by the government to keep retail inflation at 4 per cent with a margin of 2 per cent on the either side.

A surge in retail inflation reading this week revives debate among sovereign bond traders on how long the RBI could retain its dovish policy stance. Some investors are bringing forward bets for policy normalisation after retail inflation crossed RBI’s comfort zone of 2- 6%.

The benchmark 10- year bond yields soared to 6.07%, its highest since April 30, on Wednesday. It was little changed on Friday at 6.02%

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