MUMBAI: Indian government bond yields inched down in early trade on Friday, tracking a fall in US peers, with markets looking towards a fresh debt supply auction later in the day for further direction.
The benchmark 7.26% 2033 bond yield was trading at 7.0342% as of 10:00 a.m. IST, after closing at 7.0408% in the previous session.
New Delhi aims to raise 330 billion rupees ($4.03 billion) through the sale of bonds, which includes 140 billion rupees of benchmark notes and 110 billion rupees of a new 30-year paper.
“We will be able to gauge both traders’ appetite for the benchmark and long-term investors’ appetite for the 30-year bond at today’s auction,” a trader with a private bank said.
Indian bond yields may dip as US inflation data boosts Fed pause bets
US yields eased on Thursday, after initial jobless claims data suggested the labour market could finally be showing signs of cooling off, which may not let the Federal Reserve remain hawkish for much longer.
The 10-year yield eased seven basis points (bps), and was trading at 3.72%, while the two-year yield, a closer indicator of interest rate expectations, dipped six bps and was at 4.68%.
The Fed on Wednesday held its policy rate steady but signalled that rates would rise by another 50 bps by the end of 2023.
This was the first pause by the US central bank after hiking rates by an aggregate of 500 basis points since March 2022.
However, even though market participants expect the Fed to raise rates by 25 bps in July, they are not pricing-in a follow-up hike.
The odds of the Fed increasing rates next month currently stand at around 70%.
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