on May 06, 2021)Mumbai: Government bond yields dropped below the psychologically important 6% level on Wednesday after the central bank announced a Rs 35,000-crore bond buyback programme on Wednesday as part of its latest pandemic-relief package.
Bond dealers, however, are cautious on the sustainability of the rally given the huge borrowing programme of the Centre and the states.
The benchmark yield on 10-year government bonds, which had closed the previous session at 6.02%, ended at 5.97%. Bond dealers, however, said that the small sizes in state loan auctions and cancelled government bond auctions, indicate that there is muted demand for government securities from buyers. As a result, despite the RBI support to the gilt market, yield is expected to remain range bound with an upward bias.
