MUMBAI: Indian government bond yields are expected to open marginally higher on Monday, as oil prices recover further, while broad market awaits domestic monetary policy decision due later in the week.
The benchmark 10-year yield is likely to move in a 7.20%-7.25% band, a trader with a private bank said.
The yield ended at 7.2215% on Friday, with an eight basis points decline last week.
As it was evident from Friday’s moves, traders showed their discomfort below 7.20% for the benchmark, and we may see some more uptick as oil has corrected since last week’s levels, the trader said.
Oil prices gained on Monday, as Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together called OPEC+ have held their output targets steady ahead of a European Union ban and a price cap kicking in on Russian crude.
OPEC+ agreed on Sunday to stick to their October plan to cut output by 2 million barrels per day from November through 2023. The benchmark Brent crude contract was trading 1.7% higher at $87 per barrel.
India is one of the largest importers of the commodity and oil prices have a bearing on nation’s inflation, which eased to 6.77% in October.
India bond yields lower ahead of fresh debt supply
The Reserve Bank of India led Monetary Policy Committee is expected to hike rate by a smaller 35 basis points to 6.25% on Wednesday, according to economists polled by Reuters.
A strong two-thirds majority said it was still too soon for the central bank to take its eye off inflation.
Bond yields had fallen last week after the US Federal Reserve Chairman Jerome Powell signalled that central bank could slow its pace of interest rate hikes in December.
The Fed is expected to hike interest rate by 50 basis points on Dec. 14 to 4.25%-4.50% band.
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