Bond yields at 3.5-year high: Why rising bond yields are sign of concern, Anil Singhvi explains

Ahead of the Reserve Bank of India’s (RBI) monetary policy decision on Wednesday, the bond yields in India are at a three-and-half year high at over 7.5 per cent. To this, Zee Business Managing Editor Anil Singhvi termed as a sign of a concern during a special edition of Editor’s Take. 

According to the managing editor, the bond yields are rising as they perhaps have factored a rate hike of at least 0.5 per cent in the monetary policy of RBI on Wednesday. Singhvi on Monday has expected a rate hike between 0.5-0.75 per cent by RBI to curb the inflation pressures in India. 

Singhvi believes that the RBI Governor Shaktikanta Das on Wednesday is likely to give a pessimistic commentary as the positive factors, which might have given some comfort are unavailable.  

Nothing prominent or special has happened after the rate hike in mid-term policy with respect to inflation, Singhvi said. However, good agriculture production is likely as the weather department predicts normal monsoon in 2022, this may give some relief to curb inflation.” 

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Despite OPEC’s (Organization of the Petroleum Exporting Countries) decision to raise the production of crude oil, it is still at around $120 per barrel. Globally, commodities except metal are not easing and food and vegetable inflation is beyond the central bank’s ambit, the managing editor said. 

The Indian markets, especially rate-sensitive sectors such as banking and financials are likely to be under pressure on Wednesday, Singhvi said. 

Terming it a 'Make or Break' policy, the managing editor on Monday said that the RBI would be able to curb the inflation worries post the June policy, and there should not any further hike at upcoming MPC meetings.  

The Monetary Policy Committee of the RBI is scheduled to meet between June 6-8, 2022, for the bi-monthly policy decision. The central bank in May had announced a 0.4 per cent interest rate hike.