Posts Tagged: bond yield

 

The benchmark 10-year bond yield touched 9% on Monday at 12.30pm, a level last seen on 25 August 2008.

The banks will have to make good the depreciation in their bond portfolio by setting aside money. In accounting parlance, this is called mark to market (MTM), or valuing a financial asset in accordance with their market value and not the price at which they are bought.
By a Reserve Bank of India (RBI) estimate, a 100 basis points (bps) rise in bond yield on banks bond portfolio is close to Rs.30,000 crore. One basis point is one-hundredth of a percentage point. That was the depreciation loss that was staring at Indian banks at the end of June. At the current level, the yield on the benchmark 10-year paper has risen close to 150 basis points. This means, the impact of the rise in bond yields of the entire banking industry at this juncture could be around Rs.45,000 crore. >> Read More
 

India is too reliant on foreign hot money. The reason: it doesn’t give savers enough reason to put their money in the bank. That is now becoming a pressing concern. The outmoded state-built apparatus of financial repression needs to be junked.

Domestic savers aren’t getting their dues. While consumer prices shot up 9.9 percent in June, year on year, one-year bank deposits earn 8.25 percent on average. That’s a negative real interest rate of almost 2 percent, the second worst in Asia after Hong Kong. Adjusted for inflation, savers’ money is gradually disappearing.

Repressed Indian savers can’t easily take their funds overseas because of capital controls. But they can invest in other things, like gold. India’s annual gold imports more than doubled in two years to $62 billion in the financial year that ended in March last year. Measures like higher import duties on gold would merely address the symptoms, but not the root cause of financial repression. The collapse of a pooled wealth or “chit fund” company in April showed that savers are also being lured by Ponzi-scheme style products that promise them a decent return, something they can’t get from the banks. That creates new risks for the financial system. >> Read More

 

India is too reliant on foreign hot money. The reason: it doesn’t give savers enough reason to put their money in the bank. That is now becoming a pressing concern. The outmoded state-built apparatus of financial repression needs to be junked.

Domestic savers aren’t getting their dues. While consumer prices shot up 9.9 per cent in June, year on year, one-year bank deposits earn 8.25 per cent on average. That’s a negative real interest rate of almost two per cent, the second-worst in Asia after Hong Kong. Adjusted for inflation, savers’ money is gradually disappearing.

Repressed Indian savers can’t easily take their funds overseas because of capital controls. But they can invest in other things, like gold. India’s annual gold imports more than doubled in two years to $62 billion in the financial year that ended in March last year. Measures like higher import duties on gold would merely address the symptom, but not the root cause of financial repression. The collapse of a pooled wealth or “chit fund” company in April showed that savers were also being lured by Ponzi scheme-style products that promised them a decent return, something they couldn’t get from the banks. That creates new risks for the financial system. >> Read More

 

Reserve Bank of India (RBI) chief warned of upside risks to inflation and expressed worry over the country’s high current account deficit on Thursday, denting hopes for rate cuts and sending bond yields to a two-week high and the rupee to a 10-month low.

RBI Governor Duvvuri Subbarao said the current account deficit, which hit a record high 6.7 percent of GDP in the December quarter on heavy oil and gold imports, would be a key factor in monetary policy decisions.

The RBI has cut policy interest rates by 25 basis points at each of its three reviews in 2013. Investors and analysts had generally expected another cut at its next review, on June 17. >> Read More

 

Government Bond 10Y

Above is Monthly Chart of  : Government Bond 10 Year

Just Click to Enlarge the CHART 

On Friday it closed at 7.41 level 

REDALERT

Below 7.85 level ,We See India Bond Yield to tumble upto 7.096 ,6.843 level very soon !!

If this is the Indication then it means will see More Firework in Bank Stocks ,Bank Nifty in coming Weeks and if Bond Yield to tumble then it means some unexpected move from RBI on card in next month Meeting ??

Government Bond 10Y | Notes

A government bond is a security issued by a national government denominated in the country’s own currency. The most common process of issuing bonds is through underwriting. In underwriting, one or more securities firms or banks, forming a syndicate, buy an entire issue of bonds from an issuer and re-sell them to investors. The security firm takes the risk of being unable to sell on the issue to end investors. However government bonds are instead typically auctioned. Bonds issued by national governments in foreign currencies are normally referred to as sovereign bonds. The first ever government bond was issued by the English government in 1693 to raise money to fund a war against France. In the past, Government bonds were usually referred to as risk-free bonds, because governments could easily devaluate their currencies or raise taxes to redeem the bond at maturity. However, the recent downgrade of the United States debt rating and the on-going sovereign debt crisis in the European Union has cast serious doubts into those risk-free assumptions. Moreover, unless governments issue inflation-indexed bonds, there is inflation risk, in that the principal repaid at maturity will have less purchasing power than anticipated if the inflation outturn is higher than expected. 

Technically Yours/ASR TEAM/BARODA/INDIA

 

 

Barrons came out with their 2013 Outlook today and I was not surprised to see that all of the forecasts are positive.  There isn’t a single forecaster who expected the S&P 500 to fall this year.  There is only one forecaster who expects the 10 year bond yield to fall from its current level of 1.7% and he only sees a 10 bps decline to 1.6%.  Here’s the round-up:

Stephen Auth, Federated Investors

S&P Year-end Target: 1660

2013 GDP Growth: 1.4%

2013 End 10 Year US Treasury Yield: 2%

Barry Knapp, Barclays

S&P Year-end Target: 1525

2013 GDP Growth: 2.1%

2013 10 Year US Treasury Yield: 1.6% >> Read More

 

Lowest since early April.

Meanwhile, Italy 10 year govt bond yield down -7  bps at 4.52%.  Lowest in nearly two years.

Italy’s Tesoro is looking to sell EUR 4-6 bln of  5yr 3.5% Nov 2017 BTP and 10yr 5.5% Nov 2022 BTP’s

Results are due around 1010GMT

European Morning Wrap

08 November 2012 - 17:32 pm
 

Precious little net change in major spots and crosses when all said and done as market awaits BOE,  ECB rate decisions and Draghi press conference.

EUR/USD down marginally at 1.2735 from early 1.275o.  Early reports had sell orders clustered up at 1.2780/00 but they were never seriously threatened.  We did have a cumbersome rally attempt early, but it was stopped in its’ tracks by the Market News sourced story (see above). Horrible  Italian bank bad loan data also weighed.  The sell-off got as far as 1.2719 before steadying.

USD/JPY unchanged at 79.85 in comatose trade.  EUR/JPY marginally lower at 101.70 from early 101.85 having been as low as 101.60.  US investment bank seen selling the cross this morning.

Cable touch lower at 1.5950 from early 1.5975.

Buy India bonds before RBI does: BarCap

11 October 2012 - 11:53 am
 

Barclays Capital recommends long positions in India 10-year bonds with a yield target of 7.75 per cent before end-December and 7.50 per cent by end-March.

 * The 10-year bond yield was last at 8.15 per cent.

* RBI may buy 1.2 trillion rupees of bonds in the second half of fiscal 2012/13, or 60 per cent of the planned issuance, to offset incremental liquidity tightness, BarCap estimates.

* Banks likely to maintain excess SLR holding given continued slow credit growth and rising bad loans, they add.

* Investors looking to buy debt and looking to extend duration can look at 8.83 per cent 2041 and 8.97 per cent 2030 bonds as both offer high coupons, says the note.

* For investors looking to maintain duration close to 10-year and don’t mind illiquid bonds, bank suggests the 9.15 per cent 2024s.

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Technically Yours,
Team ASR,
Baroda, India.