Bloomberg: 10-year yield +4bp to 6.86%. Five-year +8bp. Aug 3-5 minutes. Gupta: a hike case may emerge. Malhotra: broad-based price pressures may need a tighter response.
Indian bonds fell after the minutes of the Reserve Bank’s latest policy meeting stoked fears of a sooner rate hike. That is Bloomberg, 19 August, updated 9:27 p.m. PDT. Benchmark 10-year yields climbed 4 basis points to 6.86% on Thursday. Five-year notes climbed as much as 8 basis points.
The minutes of the 3–5 August meeting, released after late Wednesday, showed a more hawkish tilt than the 5 August policy statement. Deputy Governor Poonam Gupta said a case for a rate hike may emerge during the year. Governor Sanjay Malhotra said any evidence of a broad-based increase in price pressures may need a tighter policy response.
Sonal Varma, chief economist for Asia ex-Japan at Nomura Holdings, wrote that “the minutes challenge our view of an extended policy hold,” and that the commentary was “surprisingly hawkish, with a number of members debating potential policy tightening later in the year within the scope of the existing growth and inflation forecasts.”
Gopal Tripathi, head of treasury at Jana Small Finance Bank, said traders had stocked up on bonds after the dovish statement and that the minutes “neutralize” that. He estimates a 6.80–7.00% range for the 10-year.
The rupee tape is already live: USD/INR near 95.62. Live rupee is on prices.
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