Low availability of bonds and rising interest rate has again made the 10-year bond thinly traded in the market, shifting the market interest to other benchmarks. The Reserve Bank of India (RBI) has issued just Rs 28,000 crore of this paper, cancelling a Rs 14,000 crore auction last Friday. Refusal to sell the bond on Friday’s auction is being interpreted as intervention in the 10-year segment, which the bond dealers say did not go well last time. The RBI had bought most of the last benchmark from the market, hoping to keep the yields contained. However, the market made the five-year and the 14-year bonds as the most traded, staying away from the 10-year segment altogether. Banks too are not showing interest in the bond market for multiple reasons. One being that they are over-invested already. Against their mandatory investment limit of 18 per cent of the deposit book, banks’ investment is about 30 per cent. The deposit growth in the banking industry is 10.7 per cent year-on-year, not fast enough to open up space for fresh bonds. However, the supply continues uninterrupted. Bond dealers also say the pricing on the 10-year is not reflecting the market realities, and it would be difficult for the RBI to sell the bonds at the yields it prefers. The 14-year bond was the most traded on Tuesday. The yield on this closed at 6.88 per cent. The 10-year bond yield closed at 6.23 per cent. The difference in yield between the two, for a four years period, is 65 basis points. One basis point is a hundredth of a percentage point.