India Bond Yields at Six-Week Low as Economic Growth May Slow.

India’s 10-year bonds rose, pushing yields to their lowest level in six weeks, on speculation the tenth interest-rate increase since the beginning of last year will damp growth and slow inflation.

The Reserve Bank of India raised the repurchase rate by 25 basis points to 7.5 percent on June 16. Oil fell 1.4 percent today after declining more than 6 percent last week. India imports almost 80 percent of its crude.

“Investors are betting slowing growth will bring down inflation and boost bond returns,” said Krishnamurthy Harihar, Mumbai-based treasurer at FirstRand Ltd. “The softening of crude prices will also help in taming inflation.”

The yield on the 7.8 percent note due April 2021 dropped eight basis points, or 0.08 percentage point, to 8.19 percent, as of 9:54 a.m. in Mumbai, according to the central bank’s trading system. That’s the lowest level since May 6.

The wholesale-price index rose 9.06 percent in May from a year earlier, compared with 8.66 percent in April, official data showed on June 14. Gross domestic product rose 7.8 percent in the three months ended March 31 from a year earlier, the slowest pace in five quarters, government data show.

Source : bloomberg.com