Mumbai, Jan. 2: Yields on government bonds, that have been going downhill in the last few weeks, today hit a fresh low with yields on the 10-year benchmark 7.40 per cent 2012 security dipping below the psychological level of 6 per cent to 5.98 per cent.
Only recently, it had slipped below the bank rate. The spread between a one-year and 10-year paper is now less than 50 basis points.
Today’s fall has been attributed to the ample liquidity prevailing in the system and expectation of a repo rate cut by the Reserve Bank of India (RBI) towards the end of this month or early February. The markets are expecting a cut in the range of 25-75 basis points.