Why are bond yields rising?
A highly skilled finance professional, with an MSc with a focus on Financial Markets and Investments from SIBM Pune, and a Bachelor of Business Administration from NMIMS University. A seasoned Relationship Manager with an established track record in the field of financial services.
This year’s budget pegged the government’s gross market borrowing for FY23 at Rs 14.95 trillion, double the target of the previous fiscal year. This surprisingly high target pushed the G-sec yields to close to 7 percent as higher targets mean increased bond supply.
There exists an inverse relationship between the price and yield of a bond. As supply increases and bond prices go down, bond yields rise and vice versa.
Moreover, the market was anticipating India’s sovereign bonds to be included in the global bond market indices and bring in foreign funds into the market. Such an inclusion would have supported the demand for and eased the bond yields. However, this inclusion has been put on hold.
Read More:- https://www.blog4finance.com/how-increase-in-bond-yields-impact-investors/
