Macro and Government Bond Commentary: Yields reverse early upside with focus now shifting to MPC Jun meeting, liquidity surplus widens • The 10Y benchmark (6.79 GS 2034) opened higher at 6.28% with RBI surplus transfer for FY25 said to be modestly softer than expected. This was said to be on account some participants extending short positions in early trade. Moves higher in yields did not sustain, with yields falling within 30 minutes of opening trade. This buying continued until noon – said to be on short covering, with focus now shifting towards MPC Jun meeting outcome. Expectations on monetary easing remains intact, with the policy stance disassociated with the liquidity management approach. Yields were ranged through the day, though some profit booking was seen in late trade. The 10Y point closed trade at 6.25%.
