Why did bond yields shoot up after the Budget announcement?
Answer
Answer
The benchmark 10 year yields in the Indian bond markets shot up on the day of budget from 6.66% to 6.89%. This was triggered by a sharp spike in government borrowings for FY23 From Rs.12 trillion to Rs.14.9 trillion. That is a huge leap and will put pressure on yields. However, bulk of the fiscal deficit creation is passed to states, which is why yields tapered later.