Bond Yield Opens Lower As Analysts Expect More Easing On Higher Inflation

The yield on the 10-year government bond opened tad lower on November 14 after traders in the bond market were cautious due to retail inflation spiking to a 16-month high figure of 4.62%, even breaching the RBI's targeted levels.

Bond Yield Opens Lower As Analysts Expect More Easing On Higher Inflation

The yield on the 10-year India government bond came in at 6.515% in comparison to its previous close of 6.53%.

Now analysts are eyeing the GDP for the second quarter due to be released on November 29 and may point to a deeper slowdown and therefore more monetary easing from the central bank.

"Slowing growth will dominate the attention of the central bank rather than temporary spike in food inflation. Flow of frequency indicators reaffirms the broad-based slowdown in economic growth. Near term growth momentum is projected to remain lackluster with FY20 GDP growth estimated at 6.0% with downside risks. It is imperative for the RBI to remain accommodative and support growth. With CPI inflation projected to average below 4% amid widening negative output gap, we expect RBI to deliver another 25-40 bps in the rest of FY20, before getting into a prolonged pause," said Amar Ambani, head of research - Institutional Equities at YES Securities

Also, the factory output for the September month came in at an 8-year low.

Rupee amid all these macros has breached the 72 mark and was last quoting at 72.10 per US dollar.

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