Bonds Bid As Stocks Fall; S&P Says Could Be Vulnerable

Bond space has seen a mild bid in early trade as equity markets in the region slip. 10-Year yield last down 1.1bps at 6.168%. Bidding in the 5-Year sector has not been as strong, possibly due to the announcement of an INR 30bn 5-Year sale from Piramal Capital, while state-run REC seeks bids for INR 20bn 3-Year debt.

• There is a report from S&P doing the rounds on Bloomberg which posits that Indian debt is one of the most vulnerable to higher yields from the reflation trade. The report says India has "seen inflation rise in recent months. Real policy rates are below long-run average levels, eroding the return buffers. Capital may be quicker to leave and the central banks may have to by raising policy rates."
• Markets await a sale of 3-, 6- ,12-month bills for a total INR 190bn ahead of the RBI auction on Friday.