BANKING/FINANCE: Bonds rally on fall in global oil prices.

from BUSINESS LINE, August 11, 2008 Bangalore, Aug. 10 - Bond markets rallied as yields softened on the back of falling international oil prices. Yet, inflation remained a major worry as the whole sale price index breached the 12-per cent mark. However, the Chief Economic Advisor, Ministry of Finance, Dr Arvind Veermani, dismissed fears of inflation. He said, "Inflation is not a major worry. The GDP deflator is 6.5 per cent." (Gross Domestic Product deflator is another measure of price change attained by dividing nominal GDP by real GDP).

Besides, even at the current WPI, inflation was lower than comparative US Producer Price Index (PPI). US PPI increased 14.1 per cent during a comparable period.

The changed inflation outlook notwithstanding, what favoured bond markets were international oil prices. Oil prices were on …