MUMBAI: Indian government bond yields were largely unchanged after opening marginally higher on Thursday as lower US yields offset the impact of strong local growth data that could potentially delay monetary policy easing.
The 10-year benchmark 7.26% 2033 bond yield was at 6.9934% as of 10:00 a.m. IST, after closing at 6.9874% in the previous session, a trader with a private bank said.
“The growth data should have more impact on the longer end, but move in US yields is helping, especially the comments that have reversed the expectations from the June Fed policy,” a trader with a state-run bank said.
India’s economic growth accelerated to 6.1% in January-March from a year earlier, beating a forecast of 5.0% in a Reuters poll of economists.
The full-year growth estimate was revised to 7.2% from an earlier estimate of 7%.
India’s economy grew 9.1% in 2021/22, and the government expects growth to remain around 6.5% this financial year, despite risks emerging from a global slowdown.
The data renews focus on the Reserve Bank of India’s (RBI) monetary policy decision due on June 8 and its likely trajectory.
Most market participants expect the RBI to remain on a prolonged pause in 2023.
Meanwhile, US yields eased as bets of a rate hike by the Federal Reserve in June eased sharply after comments from central bank officials who supported skipping a rate hike in the next policy meeting.
India bond yields may dip as US peers ease
The 10-year US yield ended at 3.64% on Wednesday, down by 18 basis points in the last two sessions, while the two-year yield was down 20 bps to 4.39%.
The odds of a rate hike by the Fed in June have eased to 38%, from around 72% a few days ago.
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