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Stagflation risks grip bond markets, high yields are here to stay: Report

The initial trigger for the spurt in the bond yields was the MPC decision to hold the rates, citing the spike in the inflation print on August 6

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"These are early signs of the yield curve adjusting itself to a higher level," warns the report. Photo: Shutterstock

3 min read Last Updated : Aug 28 2020 | 11:40 PM IST

The spike in both inflation print as well as in the benchmark yields indicate that the bond market is in the grip of stagflation, and the higher yields are here to stay, warns a report.

The 10-year G-sec yields have climbed up rapidly by 35 basis points (bps) over the last three weeks, while the July inflation print is 50 bps above the upper end of the Reserve Bank's tolerance level, thus virtually closing the rate cut window in the medium term, a report by Acuite Ratings said on Friday.

The yield differential between two-year and ten-year bonds has again

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