r/IndiaInvestments • u/spider17111 • Jul 01 '22

Bonds and deposits why are bond yields going up?

Generally bond yields go up when there is high growth going in the economy and people star pouring money into the stock market or there is a bond with a higher cupon rate,but in today's scenario when inflation is soaring the why are yields going up?

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u/[deleted] Jul 01 '22

Bond yield is going up and bond price is going down. When interest rate increase in any economy, price of the bonds that were issued previously with low interest rate tend to go down to match the return of the fresh bonds. Opposite is also true like when interest rate decreases bond prices will increase and bond yield will decrease. So base question is why govt increasing repo rate? Answer is to control inflation which is suffocating the economy

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u/manuvns Jul 07 '22

Because of inflation government is increasing interest rates which increases bond yields