MUMBAI: Indian government bond yields were flattish in early trading on Tuesday, as market participants awaited domestic and US inflation data.
The benchmark 10-year bond yield was at 6.7866%, as of 10:00 a.m. IST, compared with the previous close of 6.7874%.
India’s October consumer inflation data is due at 4:00 p.m. IST later in the day.
Economists polled by Reuters expect the print to climb to a 14-month high of 5.81% in October, primarily due to a rise in vegetable and edible oil prices.
Citi said retail inflation could rise to 6.3%, driven by food prices.
The rise in inflation, alongside recent “hawkish comments” from the Reserve Bank of India chief Shaktikanta Das, have reduced the probability of a rate cut in December, with HSBC shifting its call for a rate cut to February.
Meanwhile, US retail inflation data is due after Indian market hours on Wednesday.
India bond yields biased lower on pullback in US rates
The 10-year US Treasury yield was around 4.33% in Asian hours, with interest rate futures predicting a 65% probability of a Federal Reserve rate cut next month, down from nearly 80% a week earlier.
Five Indian states will raise 54 billion rupees ($639.87 million) via bonds later in the day, while New Delhi will sell 370 billion rupees of bonds on Thursday, which includes a new 15-year bond. Indian financial markets will be closed on Friday for a local holiday.
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