The Hindu Business Line : Bond market subdued

The bond market was subdued and volumes were low due to confusion about the liquidity and rates. Total traded volumes on the order matching system were at Rs 3,100 crore (Rs 5,220 crore). According to bond dealers the market is confused about liquidity, which is surplus on one day and tight the next day. This is because of the confusion about the yields. A bond dealer with a private bank said that banks tended to borrow more than required, anticipating that yields would go up. But when yields came down, they were left with surplus cash. "We will have to live with plus or minus Rs 20,000 crore as bank's balance sheets have grown so much," he said. But the overall sentiment is that yields have topped and cannot go up unless the RBI takes further steps to tackle inflation which seems unlikely, he added. The 8.24 per cent-10 year -2018 paper opened at Rs 102 (7.94 per cent) and ended at Rs 101.99 (7.94 per cent), unchanged from the previous close. The 7.59 per cent-8 year-2016 paper opened at 97.55 (8.01 per cent YTM) and closed at Rs 97.56 (8.10 per cent YTM), slightly lower than the previous close of Rs 97.60 (8 per cent YTM). - Our Bureau

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