Macro and Government Bond Commentary: Yields rise sharply with escalating border tensions, INR weakens sharply • The 10Y benchmark (6.79 GS 2034) opened mildly lower at 6.33% tracking a fall in treasury yields overnight (with FOMC meeting outcome largely along expected lines) and fell further in the morning session. Yields began edging higher around late morning session, with selling momentum picking up remarkably in the afternoon session. This was in line with a sharp weakness in the INR following escalating tensions between India and Pakistan. INR depreciated by ~90 paisa on Thursday – posting the longest losing streak in over 2 years. The 10Y point closed trade at 6.40% vs 6.34% prev. (The 10Y bond yield witnessed stop loss being triggered at 6.36% allowing yields to rise even further).
