Bond yields have spiked to 7.17 percent yesterday. In an interview with CNBC-TV18, A Prasanna, Chief Economist, I-Securities Primary Dealership (PD) shared his thoughts on the same.
Market is positioning itself ahead of the consumer price index (CPI) data. We do expect CPI to come around 4.5 percent, he said.
Most of the rise in crude prices have not been passed on to domestic price, so it is possible that post Gujarat elections, there will be fuel price hikes as well, he added.
According to him, the inflation outlook doesn’t look very good in the short-term plus there is a lot of uncertainty about the fiscal outlook.
Market will wait for the CPI data so more price action could happen tomorrow and today could be a muted day, said Prasanna.
7 percent is a reasonable level for 10-year government bond yield, he further mentioned.
As far as domestic market is concerned, I don’t think anybody is pricing in a rate hike within the next six months, he said.
For the whole of 2018 there will be no change in interest rates, Prasanna added.For full interview, watch accompanying video...