Business Standard

India bond yields likely to ease tracking US peers, eyes on debt auction

The US Treasury yields slipped on Thursday ahead of inflation reports that are pivotal for the Federal Reserve's higher-for-longer rate strategy

Govt bonds

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Indian government bond yields are expected to be a little lower in early trading on Friday, tracking US peers, with the focus now turning to the weekly debt auction for further cues.

The benchmark 10-year yield is likely to move in a 7.10 per cent-7.15 per cent range, following its previous close of 7.1321 per cent, a trader with a state-run bank said.

"There are no strong directional cues so the yield will trade in a narrow range during the day. Market awaits US and local inflation data next week," the trader added.

The US Treasury yields slipped on Thursday ahead of inflation reports that are pivotal for the Federal Reserve's higher-for-longer rate strategy. Yields have been on a declining trajectory since the April payrolls came in below expectations last week.

"While any sign of US inflation moderating will bring a lot of relief, if inflation remains sticky (which is most likely the case as energy costs were elevated in April), we could see a reversal in rate cut sentiment," said Anitha Rangan, an economist at Equirus Group.

Traders are pricing in the probability of two 25-basis-point cuts this year, with the first expected in September.

Meanwhile, market participants will also see if the Indian government announces another round of bond buybacks as banking system liquidity continues to stay in deficit.

The government will assess if it needs to undertake another round of buying back government securities after the central bank accepted offers to buy back government bonds worth 105.10 billion rupees ($1.26 billion) at an auction on Thursday against the notified amount of 400 billion rupees.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


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First Published: May 10 2024 | 9:50 AM IST

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