Gilts review: Govt bonds bogged down by concerns about data to be released next week

Data will influence major policy changes in the US, European and UK central banks, which is why investors preferred to stay on the sidelines.

FPJ Web DeskUpdated: Friday, December 09, 2022, 09:58 PM IST
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Apprehension about a data-heavy week has pushed down government bonds, while some gilts of specific tenures have bounced back from losses thanks to a strong demand at the Rs 280 billion auction.

The 2032 bond closed at Rs 99.72 on Friday, compared to Rs 99.79 on the day before, even as traders held back on stocking gilts, before the inflation data for November is released in the US and India. The data will also influence major policy changes in the US, European and UK central banks, which is why investors preferred to stay on the sidelines.

For taking in the fresh batch of gilts, investors are looking for higher yields, and the five-year as well as 10-year benchmark bonds fetched strong demand.

The 2027 Bonds worth Rs 70 billion were sold on Friday, along with 2032 bonds worth Rs 120 billion and 2052 bonds worth Rs 90 billion.

Some sales were also driven by the RBI's recent move to extend the held-to-maturity limit for banks. The worst hit was the demand for 14-year benchmark bonds, since traders aren't sure if there's appetite for long-term gilts in the market.

Most people don't want to hold on to a large portfolio while going into the next week which might bring ups and downs, because of data scheduled to be released.

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