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Below is quote on Bond yields hitting a multi-year high by Mr. Vishal Amarnani, Head of Fixed Income, Emkay Wealth Management.

“As mentioned earlier, we are closing watching the 7.35 level on the 10-year benchmark. The level was taken today due to a surprise hike in the Repo rates by the RBI. The next technical level to watch out for is 7.60 if the closing is above the 7.35% level.

By hiking the CRR, RBI is forcing the banking system to hold additional liquidity in reserves rather than lending it at lower rates to businesses. Around Rs. 80,000 cr will be not available wef May 21, 2022, for lending from the banking system. The current liquidity in the system is approx Rs 7 lakh crores and the cost of funds is likely to go up. We see all the incremental lending across the tenor going up post today's move by the RBI.”

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