MUMBAI: Indian government bond yields were stuck in a thin range early on Friday, despite US yields remaining elevated, as market participants await a fresh debt supply through the weekly auction.
The 10-year bond yield was at 6.7767% as of 9:45 a.m. IST, compared with its previous close of 6.7824%.
New Delhi will raise 320 billion rupees ($3.75 billion) through the sale of bonds, including a new seven-year bond and the liquid 15-year note.
“With nowhere else to look for cues, traders would look out for auction cutoffs to gauge the mood of the investors at a time when most trading desks are thinly staffed,” a trader with a primary dealership said.
Trading volumes have plummeted in the last few sessions as activity turned tepid towards the calendar year-end.
The daily average volume over the last two weeks has more than halved to around 363 billion rupees from 718 billion rupees in the similar preceding period, data from the Clearing Corp of India showed.
Market participants have also remained concerned over the liquidity deficit in the banking system through the last couple of weeks.
The central bank is set to infuse up to 1.50 trillion rupees via a 14-day repo later in the day, but traders have said the amount may not suffice.
India bond yields rise in lead up to domestic inflation data
Globally, US Treasury yields stayed elevated, with the 10-year yield briefly touching its highest level in nearly eight months after a solid employment report that could likely allow the Federal Reserve to adopt a less dovish stance in 2025.
Underlying sentiment in the world’s largest economy has turned cautious, after the Fed downsized its 2025 interest rate cut forecast to 50 basis points last week.
The odds of a pause in January stood at 89%, according to CME’s FedWatch Tool.
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