Indian federal bond yields ended largely steady on Friday as traders eyed inflation data on Monday for cues on the tone of the central bank's policy review next week, with expectations of a quarter point hike already priced in. The Reserve Bank of India (RBI) is struggling with its dual objectives of containing inflation and promoting growth, its governor had said on Thursday.
India's industrial output in January topped forecasts to grow an annual 3.7 percent, the strongest reading in three months. Inflation data for February due on Monday at 0630 GMT was closely watched. The yield on the most-traded 8.13 percent 2022 bond ended at 8.05 percent, up 1 basis point from Thursday, while the second most-traded 8.08 percent 2022 bond yield was steady at 8.06 percent.
The illiquid benchmark 10-year bond yield ended flat at 7.95 percent. Volumes were low at 66.75 billion rupees ($1.5 billion) on the central bank's trading platform compared with 100 billion rupees at the end of the day. The benchmark five-year swap rate ended at 7.82 percent down 3 basis points, while the one-year swap rate closed at 7.31 percent, up 1 basis points from Thursday.
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