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The benchmark 6.94% 2036 bond yield climbed 6.5 basis points to 7.1848%, hitting its highest level since April 2024. Stop-loss selling swept through bonds and overnight indexed swaps, traders said, opening the way for a test of 7.25% on the 10-year yield. In a historic move, India's central bank has recorded net sales of bonds amounting to 1 trillion rupees this financial year. With predictions suggesting this figure may double by December, market analysts anticipate stricter monetary policies. The Reserve Bank of India has also reduced liquidity in the banking system, responding to past strategies to attract dollars. New Delhi's October-March borrowing calendar, released on Friday, unsettled traders by tilting issuance away from liquid five- and 10-year bonds and toward 15-year and ultra-long securities. While the headline borrowing estimate was marginally below earlier projections, the maturity mix sharpened duration risk, or the risk of falling bond prices as interest rates rise. Traders expect an RBI rate increase next week - its first since February 2023. Investors tend to avoid longer-dated bonds when rates are rising, as they are exposed to greater mark-to-market losses. Relatively tight spreads over shorter maturities may however limit further curve steepening, traders said. Market participants also fear further Reserve Bank of India open market bond sales to drain surplus liquidity in the banking system, which further added to supply woes. The RBI completed 1 trillion rupees of net debt sale on Monday, its biggest annual net bond sale in more than a decade. "We have moved to a clearly bearish duration stance," Baroda BNP Paribas Mutual Fund said, citing robust economic growth, food and energy inflation risks, elevated global yields, surplus liquidity and the RBI's pivot from VRRR absorption to outright OMO sales. The global backdrop offered little relief: the 10-year US Treasury yield rose 5 bps to 5.23%, at over two-decade highs, while Brent crude gained 4% to trade above $108. RATES OIS rates rose in tandem with Indian and global bond yields. The one-year rate added 7.5 bps to 6.2350%, the two-year rate jumped 8.5 bps to 6.45%, while the five-year rate surged 10 bps to 6.72%. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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