Benchmark bond yields spike briefly after PM’s economic package announcement

India’s benchmark bond yield spiked briefly on Wednesday morning following news of a 20 trillion rupees economic package, before retracing most of the losses due to the absence of details.

Prime Minister Narendra Modi said on Tuesday that India would provide 20 trillion rupees ($266 billion) in fiscal and monetary measures to support an economy battered by a sweeping weeks-long lockdown to fight the novel coronavirus.

The benchmark 10-year bond yield opened 12 bps higher at 6.28 per cent but retreated quickly to trade flat on the day by 10:15 am.

Traders said market positioning was light and shorting bonds was not working amid a lack of details on the economic package.

Yields are expected to hold in a tight range ahead of the finance minister’s press conference later in the day which could throw more light on specifics of the stimulus package.

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