Cash gush puts lid on bond yields

The taxes imposed by the government on domestic crude oil producers and fuel exports are having a soothing effect on bond yields.

On Monday, the yields on the benchmark 10-year paper fell to their lowest level since May 27 as the Centre’s move is likely to see its kitty rising by Rs 1 lakh crore.

This is expected to curtail any need for additional borrowing in this fiscal.

Yields on the 10-year government security settled at 7.37 per cent after hitting an intra-day low of 7.35 per cent. On May 27, it had closed at 7.35 per cent after touching an intra-day low of 7.32 per cent.