MUMBAI: Indian government bond yields are likely to trend largely unchanged in the early session on Monday, with markets waiting for the US Federal Reserve’s policy decision due on Wednesday before placing big bets.
The benchmark 7.26% 2033 bond yield is expected to be in the 7.07-7.11% range, after ending the previous session at 7.0784%, a trader with a private bank said.
“US yields were steady on Friday and there’s no market-moving trigger in sight till Wednesday, so local benchmark yields are expected to open steady with an upward bias,” the trader said.
The benchmark bond yield settled largely unchanged last week, after easing by 7 basis points in the previous week.
The yields have been tracking a fall in US peers on rising bets of a pause in rate hikes by the Fed after the last increase this week.
Easing US and UK inflation “give comfort” that global inflation is cooling off, but the central banks’ commentaries were yet to bring any comfort on the same, said Anitha Rangan, economist at Equirus Group.
“The Fed is not likely to pivot until they see proof that inflation is structurally down.”
Indian 10-year bond yield hits 7.10% before debt auction
The odds of a 25-basis point hike stay around 96%, but that of another increase after that have receded.
The US central bank has hiked its rates by 500 basis points since March 2022 and fed funds rate currently at 5%-5.25%.
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