India’s 10-year bonds fell for a third day on concern inflation will accelerate, reducing returns on fixed-income investments.
Official data will show next week that wholesale prices rose 7.7 percent in September, the fastest pace this year, according to a Bloomberg survey of economists. The rate was 7.55 percent in the previous month. The government sold 130 billion rupees ($2.5 billion) of securities at an auction today as part of its record 5.7 trillion rupees borrowing program for the fiscal year that began April 1.
“Inflation is still sticky,” said Srinivasa Raghavan, an executive vice president of treasury at Dhanlaxmi Bank Ltd. “Investors are probably not buying” as auctions boost the supply of fixed-income securities, he said.
The yield on the benchmark 8.15 percent notes due June 2022 rose one basis point today and this week to 8.17 percent in Mumbai, according to the central bank’s trading system.
The government sold five-year debt at 8.14 percent, 10-year notes at 8.18 percent and 18-year securities at 8.39 percent at today’s auction, according to teh central bank.
India’s consumer-price index climbed 9.73 percent from a year earlier, compared with a 10.03 percent advance in August, the Statistics Office said in a statement in New Delhi today.
One-year interest-rate swaps, or derivative contracts used to guard against fluctuations in funding costs, rose one basis point to 7.63 percent, according to data compiled by Bloomberg. It added one basis point this week.