MUMBAI: Indian government bond yields were slightly higher on Wednesday, tracking a reversal in oil prices and US yields, while market participants await growth data for further cues.
The benchmark 10-year yield was at 7.2845% as of 10:05 a.m. IST.
The yield ended at 7.2791% on Tuesday.
There is some pullback in oil prices and US yields, and hence we are seeing a very muted reaction in local bonds, a trader with a private bank said.
“Growth data remains crucial, as a weaker-than-expected print could make the task of rate hikes more challenging for the central bank,” the trader added.
The benchmark Brent crude contract was 1.2% higher at $84 per barrel, after falling by over 6% in the last five sessions.
The 10-year US yield rose 5 basis points (bps) to end at 3.75%.
The gross domestic product data will be published after market hours later in the day.
A Reuters poll showed that the Indian economy likely returned to a more normal 6.2% annual growth rate in July-September after a double-digit expansion in the previous quarter.
In April-June, Asia’s third-largest economy grew 13.5% on-year, mainly as the corresponding period was depressed by pandemic-control restrictions.
The Reserve Bank of India (RBI) raised the repo rate by 190 bps between May and September to 5.90%, including three back-to-back 50-bps moves.
The next policy decision is due on Dec. 7.
Indian bond yields rise ahead of state debt sale; oil recovery weighs
A couple of members of the rate-setting Monetary Policy Committee have favoured tapering the rate-hike cycle. A lower inflation reading has furthered hopes that the RBI may slow down its pace of rate hikes.
India’s retail inflation eased to 6.77% in October after jumping to 7.41% in September.
Traders also await US non-farm payrolls on Friday, which will provide clarity on the Federal Reserve’s rate stance.
The Fed has raised rates by 375 bps so far in 2022. Fed Chair Jerome Powell is due to speak later in the day and his comments will be scrutinised for cues on interest rates.
Comments
Comments are closed.