Govt bonds recover all losses on short covering; SDL yields surge

Government bonds recovered losses on Tuesday after short covering, with the 10-year yield closing flat at 6.60 per cent while SDL spreads widened sharply to 80 basis points

Government bonds recovered losses by the end of trade on Tuesday on the back of short covering, said dealers.

 

Yield on the benchmark 10-year government bond rose up to 6.66 per cent during the day due to large supply at the state bond auction. However, it settled flat at 6.6 per cent compared to Monday.

 

“The short positions were building up for the past four to five days. There was some short covering by the end of the day on Tuesday. There was a big buyer at the end,” said a dealer at a primary dealership.

 

There was tepid demand