Benchmark yields rise to near 18-month high

By: | Published: January 11, 2018 5:01 AM

Sovereign bonds saw a sell-off on Wednesday led by concerns over a surge in US treasury yields and spike in oil prices.

US treasury, oil prices, sovereign bondsSovereign bonds saw a sell-off on Wednesday led by concerns over a surge in US treasury yields and spike in oil prices. (Image: Reuters)

Sovereign bonds saw a sell-off on Wednesday led by concerns over a surge in US treasury yields and spike in oil prices. The yield on the old 10-year benchmark (maturing in 2027) closed at 7.44% on Wednesday, hitting the highest level since it was introduced in May last year. The yield on the new 10-year benchmark bonds (maturing in 2028), introduced last week, also closed at the highest level of 7.26%, up 10 points from Tuesday’s close. Yield on a 10-year bond was last near these levels only in end-June 2016. Experts attribute the sell-off in bonds to a surge in the 10-year US treasury yield, which crossed 2.5% on Tuesday.

Dealers also took note of a tweet by bond guru Bill Gross of Janus Henderson on Tuesday: “Bond bear market confirmed today…” On Wednesday evening, the US treasury yield was around 2.595% levels, the highest since March 2017. Also aiding the sell-off was a spike in oil prices — Brent crude was trading at a three-year high of $69.27 a barrel.

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