MUMBAI: Indian federal bond yields edged higher on Thursday as traders trimmed positions, tracking a steep rise in US yields overnight, while higher global crude oil prices also weighed.
At 10:45 a.m. (0515 GMT), the yield on the benchmark 10-year bond was at 8.23 percent, up 1 basis point (bp) from its close on Wednesday.
Total volumes on the central bank's electronic trading platform were at a moderate 34.10 billion rupees ($738 million).
"Yields up mostly on US cues, but 10-year bond yield hopefully should not go above 8.25 percent," said Anoop Verma, an associate vice president with Development Credit Bank.
"Weekly data would be watched, but do not think it will be a very big market mover," he added.
The weekly food and fuel price data, which is due around noon (0630 GMT), would provide cues on broader inflation.
US Treasuries prices sank on Wednesday as Wall Street stocks rallied for a second straight day and investors took profits on recent gains ahead of a widely anticipated speech from Federal Reserve Chairman Ben Bernanke.
However, in Asian trade, the 10-year benchmark US bond yield was at 2.27 percent, down 3 bps from late New York trade on Wednesday when it had ended up 14 bps on the day, more than 25 bps above a 60-year low.
India's one-year overnight indexed swap rate was steady at 7.63 percent while the benchmark five-year rate was up 2 bps at 6.91 percent.
Brent crude steadied around $110 a barrel on Thursday, supported by reduced US crude stocks and positive manufacturing data, countered by economic growth uncertainties.
Traders eye the Bernanke speech on Friday in Jackson Hole, Wyoming, at an annual gathering of policymakers and academics, for any signal on a third round of quantitative easing designed to stimulate the world's largest economy.
However, some market participants believe those expectations are likely to be dashed, with the Fed seen acknowledging weakness in the US economy, but unlikely to unveil new measures -- an outcome set to leave some Treasury investors disappointed.
Copyright Reuters, 2011
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