Yields jump 20 bps on borrowing target hike, banks stem free fall

The government had surprised everyone with a revised borrowing programme of Rs 12 trillion, against Rs 7.88 trillion originally planned

Bond yields rose 20 basis points (bps) on Monday in response to the steep hike in government’s borrowing programme, but banks, sitting with a huge amount of idle cash, chipped in to arrest a free fall in bonds.
 

As yields rise, prices of bonds fall, and vice versa.
 

The government had surprised everyone with a revised borrowing programme of Rs 12 trillion, against Rs 7.88 trillion planned. The weekly borrowing will be Rs 30,000 crore, as against Rs 19-20,000 crore earlier.
 

The sharp increase, with no indication of a private placement with the Reserve Bank of India (RBI), has rattled