Bond Yields Climb 5 Basis Points Amid Rise in Brent Crude Prices Above $100

Global Markets Update: March 12, 2024

Market Reaction to Iran's Attack on Ships

The global markets witnessed a significant increase in sovereign bond yields on March 12, 2024, following Iran's attack on ships near the Strait of Hormuz. 5 basis points were added to the yields at the open, resulting in a benchmark 10-year bond yield of 6.68 percent, up from its previous close of 6.63 percent.

Oil Market Volatility

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The oil market continues to be volatile, with Brent crude trading at $100.80, a significant increase of 9 percentage points overnight. The International Energy Agency (IEA) announced on March 11 that its 32 members would release 400 million barrels of crude from strategic reserves. However, Iran's aggressive stance on the Strait of Hormuz has fueled fears of supply disruption, leading to elevated prices in the foreseeable future.

Domestic Market Outlook

On the domestic front, traders will be tracking the Reserve Bank of India's (RBI) Rs 50,000 crore open market operation (OMO) bond purchase scheduled for March 13. This move aims to manage liquidity levels and influence borrowing costs by purchasing specific government bonds. Kunal Sodhani, Head of Treasury at Shinhan Bank, noted that the RBI's move will ensure enough cash is available and markets function smoothly.

Currency Update

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The rupee started the day weaker, opening nearly 30 paise lower and hovering near a record low over crude worries. The rupee was trading at Rs 92.34 after ending the previous session at Rs 92.04.