MUMBAI: Indian government bond yields were trading higher on Tuesday, tracking the relentless rise in US yields as the 10-year yield inched closer to 4.00%.
The benchmark Indian 10-year government bond yield was at 7.4816% as of 0435 GMT. The yield hit 7.5316% earlier in the day. It ended at 7.4758% on Monday, having risen by an aggregate 12 basis points in the last three sessions.
“Any move below 7.50% for the benchmark is an opportunity to sell and, till inflation data, we should see very range-bound moves,” a trader with a state-run bank said.
India’s retail inflation likely accelerated to a five-month high of 7.30% in September, according to a Reuters poll, staying well above the central bank’s tolerance band for a ninth month.
The data is due on Wednesday, followed by US inflation data on Thursday.
The yield on the 10-year US Treasury note hit 3.99% earlier in the day, on bets that the Federal Reserve would opt for another 75 basis points hike in early November in its bid to combat inflation, after a strong jobs report.
The Fed has already raised rate by 300 basis points since March to 3.00%-3.25% and markets expect that its more than likely that rates will hit 3.75%-4.00% next month.
Indian Bond yields climb on index inclusion push back, oil price rise
Chicago Fed President Charles Evans has said he sees the policy rate needing to rise to “a bit above” 4.5% by early next year and stay there.
The marginal dip in oil prices is not helping domestic yields much as traders anticipate the benchmark Brent crude contract to surpass $100 per barrel mark due to supply cuts.
India is one of the largest importers of oil and higher prices of the commodity have a direct impact on its inflation.
Meanwhile, eight Indian states are expected to raise 82.50 billion Indian rupees ($1 billion) through sale of bonds later in the day.
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