Bond markets were driven by two major factors in May: tightening domestic financial conditions and emerging market volatility. Market rates across segments and maturity profiles have increased sharply in the last two months. The 10-year government bond yield surged by 43 basis points (bps) in the last two months to close at 7.83 per cent and 10-year PSU bond yield moved up by 40 bps to 7.55 per cent.
The shorter maturity of the curve witnessed more intense sell off as the yield on three ..