MUMBAI: Indian government bond yields tracked higher US peers on Monday, with the benchmark yield hitting its highest levels in nearly four months, and as states announced another heavy borrowing schedule.
The 10-year benchmark 7.26% 2032 bond yield was at 7.4443% as of 10:10 a.m. IST, after closing higher at 7.4181% on Friday. It had hit 7.4488%, the highest since Nov. 7, earlier in the day.
The yield rose by an aggregate of 15 basis points (bps) in the last three weeks. “We are already at 7.45% and test of 7.50% remains on the cards, as there are no bullish factors which could see any strong reversal currently,” a trader with a primary dealership said.
US Treasury prices fell on Friday after data showed that consumer spending, which accounts for more than two-thirds of the economic activity, jumped 1.8% last month, against expectations of a 1.3% rise.
The personal consumption expenditures price index, which is the Federal Reserve’s preferred inflation gauge, also shot up 0.6% last month, the highest since June 2022 and after gaining 0.2% in December.
The 10-year yield was around the 3.95% mark, while the two-year yield, the closest indicator of interest rate expectations, was at 4.80%.
The Fed is now expected to raise rates by 75 bps till June, after hiking by 450 bps since March 2022.
Meanwhile, supply pressure will continue to hound local traders, as states are expected to borrow more, while the Centre will increase the supply of shorter tenor Treasury Bills in March.
Indian states aim to raise 308.33 billion rupees ($3.72 billion) through the sale of bonds on Tuesday - the highest level for the current financial year.
New Delhi will also borrow 390 billion rupees through T-Bills for the remaining five weeks of this fiscal, compared with 290 billion rupees previously.
India bond yields tad lower tracking US peers, debt sale eyed
The government raised 14.21 billion rupees via bonds in the current fiscal, and aims to garner 15.43 trillion rupees next year, amid a demand-supply mismatch, traders added.
Comments
Comments are closed for this article.