MUMBAI: Indian government bond yields were expected to open lower on Thursday, tracking a slump in oil prices as well as US yields. The benchmark 10-year yield was likely to move in a 7.22%-7.27% band today, a trader with a private bank said.
The yield ended higher for a fourth straight session at 7.2693% on Wednesday.
“After the relatively hawkish monetary policy, there should be some respite as oil and US yields both easing bodes well for local bonds,” the trader said.
US Treasury prices jumped, with the yield on the 1-year note comfortable breaking the 3.50% mark on the downside, as investors doubled down on bets that interest rates have likely peaked and inflation has moderated.
The Federal Reserve monetary policy decision is due next week, with markets broadly expecting a 50 basis points hike.
Meanwhile, oil prices continued their downward momentum, with the benchmark Brent crude contract dropping to its lowest level for 2022 on Wednesday, driven by bigger-than-expected increases in US fuel stocks.
India is one of the largest importers of crude oil, and price movements have direct impact on retail inflation.
Indian bond yields little changed as Oct inflation meets estimates
The data for November is due on Monday, and the reading is expected to fall further after 6.77% on-year rise in October.
Bond yields rose on Wednesday, after the central bank’s monetary policy committee raised its key policy rate by 35 basis points to 6.25%, the highest in over three years and its fifth straight increase, and vowed there will be no let up in its fight to tame high inflation.
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