10-year bond yield expected to rise by 6.50 per cent, interest rate hike expected

The 10-year yield will reach 7 percent in about a year. Singh said, “RBI still believes that inflation can still be stopped.

The interest earned on the bond is called the bond yield. The interest on the bond is already paid at fixed rates. there is no change in it

The 10-year bond yield may soon rise to 6.50 per cent and is likely to reach 7 per cent in a year. This is an indication of a change in the rate. Which will increase the cost of borrowing for the government, firms and retail borrowers. According to the news of Business Standard, the Reserve Bank of India (RBI) had tried to keep the yield below 6 percent for the calendar year 2020, but from February this year it has started increasing gradually.

Inflation averaged 6.6 per cent in the year 2020 and 602 per cent in 2020-21. Bond dealers said, the 10-year bond yield closed at 6.36 per cent on Tuesday. Experts say that it is expected to increase to 6.50 percent by the end of December or January. Joydeep Sen, advisor, Philip Capital, said bond yields play a big role in the 10-year segment.

interest rates will increase gradually

Sen said, we are expecting a hike in the interest rate in the policy review of 6-8 December. RBI will gradually move the interest rates upwards. The bond market has been indicating volatility in such rates for a long time. Rahul Singh, Fixed Income Fund Manager, LIC Mutual Fund said, “The 10-year yield is witnessing an increase of 6.50 per cent. Singh expects the 10-year yield to reach 7 per cent in about a year. Singh said, “RBI still believes that inflation is still preventable.

What is Bond Yield?

The interest earned on the bond is called the bond yield. The interest on the bond is already paid at fixed rates. There is no change of any kind in it. The maturity period of the bond can be from 1 to 30 years. As the bond’s value decreases, its yield increases. Whereas the yield decreases as the price of the bond increases. Due to increase in bond yields, there is a risk of increasing interest rates in the economy. Due to which the loan will become expensive. Home loans, personal loans, become costlier and demand starts falling which affects the investment.

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