Indian government bond yields are expected to rise marginally in early trading on Tuesday tracking their U.S. peers, while traders await an auction of bonds by states.
The benchmark 10-year yield is expected to move in the 7.14%-7.18% range, following its previous close at 7.1518%, a trader with a primary dealership said.
“As we were unable to see a break of 7.12% for the benchmark, there was some selling towards the end of extended session yesterday, and we are now back to around 7.15% levels, which should be the case, unless there is any fresh bullish trigger,” the trader said.
Ola Electric shares surge 10% for second consecutive session; Here’s what driving the rally Mutual Fund Calculator: Start Rs 1000 SIP at age 20 and retire with Rs 3 crore corpus – Here’s how High-end homes see notable increase in sales & launches across India’s major cities: Report ITR Deadline Extension AY 2024-25: Income tax return filing last date to be extended to August 31?
Indian states plan to raise 192 billion rupees ($2.32 billion) through sale of bonds on Tuesday, and the quantum is lower than scheduled for the second straight week.
Bond yields ended lower on Monday after India’s core inflation showed a declining trend in December, and market participants expect inflationary pressures to ease hereon.
India’s annual retail inflation rose 5.69% in December from 5.55% in November, but lower than a Reuters poll of 5.87%. Core inflation, which excludes volatile food and energy prices, was estimated at a four-year low of 3.76% according to ICICI Securities Primary Dealership.
A sustained fall in core inflation could prompt the Reserve Bank of India to ease its policy stance to ‘neutral’ as early as next month, economists said.
The RBI has held rates steady since April 2023, after raising it by 250 bps in the previous financial year to battle high inflation.
Futures showed the 10-year U.S. yield was hovering around 4%. Markets in the world’s largest economy were shut on Monday.
U.S. yields eased last week, after December producer prices data fell unexpectedly, raising bets of an early interest rate cut by the Federal Reserve. The odds of a rate cut in March stand at around 71%, according to CME FedWatch Tool.