supply

the math of 7's. doubles capital every ten years. sovereign bonds. why select the slice of unlimited equity risk and dispersion of returns ?

supply

“The market reaction clearly suggests that the OMO cancellation impact was shortlived and risk appetite has been impacted more than the market was assuming initially,” said Suyash Choudhary, head of fixed income at IDFC Asset Management Co., which has the equivalent of $10 billion. “The already high supply of government and state bonds, worries over fiscal slippage and hawkish RBI inflation commentary has weighed on sentiment.”

India’s 10-year bond yield has climbed about 60 basis points from its low in July as higher oil prices pushed up the annual inflation to the highest in seven months in October. That damped speculation the Reserve Bank of India will be able to lower interest rates any time soon. The benchmark yield rose three basis points Monday to 7.03 percent.

IndusInd Bank Ltd. projects the yield will climb to 7.10 percent by the end of December, while Emkay Global Financial Services Ltd. predicts it may rise as high as 7.50 to 7.80 percent in the next six-to-12 months.