Business Standard

Indian bond yields flat as traders eye next move to infuse cash in system

The government has bought back securities aggregating to only around Rs 17,900 crore ($2.15 billion), against notified quantum of Rs 1.60 trillion in May

Bond market, Indian economy, share market, Mumbai

File image | (Photo: Bloomberg)

Reuters Mumbai

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Indian government bond yields are seen little changed in early trades on Wednesday, as traders eye the next steps that the government could take to infuse cash in the system, after three attempts to buyback securities witnessed lukewarm interest.
The 10-year yield is likely to move in a
 
7.02 per cent-7.06 per cent range, following its previous close of 7.0351 per cent, while the 7.18 per cent 2033 bond yield is expected to trade between 7.05 per cent and 7.09 per cent, after ending at 7.0783 per cent, a trader with a state-run bank said.
 
"We need to wait and see what the government can do now, as buybacks are clearly not working out, so I do not see any point in giving another one with securities maturing within this year."
 
The government saw little success for a third consecutive attempt to infuse liquidity last Thursday, as securities were bought at higher levels and the central bank was unwilling to pay higher prices, traders said.
 
The government has bought back securities aggregating to only around Rs 17,900 crore ($2.15 billion), against notified quantum of Rs 1.60 trillion in May.
 
The government is open to buying back more bonds and cut borrowings through Treasury bills as part of its short-term cash management, a source familiar with the matter said on Tuesday.
 
"We are open to cutting T-bill issuances but it will depend on government's spending needs. And this will only be short term cash management," the source added.
 
This comes after two other sources said federal government spending was likely to remain slow until about August when the new government settles in. Also, the government has already slashed supply of T-bills by Rs 60,000 crore till June end.
 
Meanwhile, the 10-year US yield stayed above 4.40 per cent, as investors waited for the minutes from the Federal Reserve's latest policy meeting due later in the day for any fresh clues on interest rates.

(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 22 2024 | 10:31 AM IST

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