MUMBAI: Indian government bonds slipped on Tuesday, after remaining largely range bound through the day, as weaker-than-expected demand for state debt weighed on investor sentiment, while a rise in U.S. Treasury yields also hurt.
Bond prices move inversely to yields.
The yield on the benchmark 10-year bond ended at 6.3053%, after closing at 6.2933% on Monday.
“There is no positive trigger in the near term, and hence we could see yields slowly drifting higher because of continuous supply from states and the central government,” said Vijay Sharma, senior executive vice president at PNB Gilts.
Indian states raised 133 billion rupees ($1.55 billion), at cutoff yields that were largely above estimates.
U.S. Treasury yields pushed higher for a second day in Asian hours on Tuesday after President Donald Trump announced tariffs on numerous trading partners, including a 25% levy on imports from Japan and South Korea beginning August 1.
India bonds steady as traders await fresh triggers
Yields have been on an uptrend as traders pared bets on the quantum of rate cuts by the Federal Reserve this year after jobs data for June showed employers added more jobs than economists had forecast.
Traders also continue to eye the next action from the Reserve Bank of India on liquidity management, as banking system liquidity surplus continues to remain elevated, with overnight rates slipping below the floor of the monetary policy corridor.
Rates
India’s overnight index swap rates inched up amid paying pressure on Tuesday.
The one-year OIS rate ended 1 basis point higher at 5.51%, while the two-year OIS rate was up 2 basis points at 5.49%. The most liquid five-year OIS rate also rose 2 basis points to 5.70%.
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