MUMBAI: Indian government bond yields are likely to trade marginally higher in early session on Wednesday, tracking similar moves in US peers, even as the broader market awaits the minutes of the Reserve Bank of India’s (RBI) latest monetary policy meeting, due later in the day.
The 10-year benchmark 7.26% 2032 bond yield is expected to trade in the 7.36%-7.42% band, a trader with a private bank said, after closing higher at 7.3883% on Tuesday.
“After some recovery in bond prices on Monday, there is no immediate major directional trigger. Hence, we should see range-bound trading till the state debt cutoffs are announced.”
Indian bond yields little changed ahead of state debt sale
US Treasury prices slumped, with the 10-year yield rising to its highest level in over three months as strong economic data led investors to price for higher interest rates.
Yields have jumped as bullish data and hawkish comments from Federal Reserve officials led investors to anticipate higher rates for longer in the battle against inflation.
The Fed has raised the policy rate by 450 basis points (bps) since March 2022, and is expected to hike it by at least another 50 bps.
The major focus will remain on the minutes of the RBI’s Monetary Policy Committee’s meeting, which has raised the repo rate for the sixth consecutive time, taking it to 6.50%, and kept the door open for more tightening.
The RBI will increase its main interest rate by 25 bps to 6.75% in April and then pause until the end of 2023, according to a Reuters poll of economists, who also said risks were for the terminal rate to go even higher.
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