MUMBAI: Indian federal bond yields were steady to marginally higher on Thursday, tracking an overnight rise in US yields and firm global oil prices. Weekly inflation data around noon (0630 GMT) was awaited for direction.
The 10-year benchmark bond yield was at 8.32 percent, 1 basis point above its close on Wednesday, after easing to 8.30 percent.
Total volume on the central bank's electronic trading platform was moderate at 30.90 billion rupees ($669 million).
The benchmark five-year overnight indexed swap rate was down 1 bp at 6.77 percent while the one-year rate was up 6 bps at 7.68 percent.
"Inflation numbers should provide further cues," a senior dealer with a primary dealership said. "Any downtick in inflation will cause some rally in government bonds and some receiving in swaps."
The central bank remains bent on fighting domestic inflation despite weakening global conditions, officials with direct knowledge of policymaking said, a week before it is widely expected to raise interest rates once again.
The weekly food and fuel price data will provide cues on broader inflation next week. The data, along with monthly industrial output also next week, will help cement views about the central bank's rates policy on September 16.
The food price index had risen 10.05 percent, its highest in nearly six months, and the fuel price index climbed 12.55 percent in the year to Aug. 20, government data last week showed.
"I think the market will continue to remain fairly rangebound until the policy. I expect a 8.28-8.34 percent band on the 10-year today," the head of fixed income trading at a foreign bank said.
Traders were also cautious of adding large positions ahead of a $2.4 billion debt sale on Friday.
US Treasury prices fell on Wednesday as investors cashed out of the richest market for Treasuries in decades, with higher stocks and a milder report on the US economy rendering the ultra-safe, low-yielding securities less appealing.
In Asian trade, the 10-year benchmark US bond yield was at 2.02 percent, down 3 bps from late New York trade on Wednesday, when it had risen 7 bps.
Brent crude held steady above $115 a barrel, after a $3 surge in the previous session, in line with a rebound in equity markets as a ruling by a top German court helped assuage fears that euro zone bailout efforts might get stalled.
Copyright Reuters, 2011
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