10-year bond is no longer the rate signal for the economy, say experts

As the Reserve Bank of India (RBI) continues hoarding the benchmark 10-year bond, the security's shortage in the market is giving rise to some unique challenges. It is not the most-traded paper anymore, but more importantly, say bond dealers, the 10-year bond is no longer the rate signal for the economy.

Most of the 10-year security is now with the RBI, and a segment of the bond market says the central bank must increase the liquidity of this segment. That can happen if the RBI issues more of these papers, even as it is nearing its traditional issuance limit, or