MUMBAI: Indian government bond yields were in a narrow range for a third straight session on Wednesday, with traders scouting for fresh directional triggers since the beginning of this week.
The benchmark 7.26% 2033 bond yield was trading at 7.1105% as of 10:00 a.m. IST, after ending the previous session at 7.1188%.
“We are not expecting any major move today and tomorrow, and the demand at debt sale on Friday could provide better clarity at the comfort zone of investors after the recent rise in yields,” a trader with a state-run bank said.
India bond yields flat in early hours; state debt auction eyed
Bond yields have been trading in a narrow range since the beginning of this quarter after the benchmark broke the key technical level of 7.08% on June 30.
Most traders are anticipating yields to rise further in this quarter amid heavy debt supply and diminishing chances of a rate cut before the first half of next year. The benchmark bond yield rose 13 basis points in June.
India plans to raise 4.47 trillion rupees ($54.47 billion) through bond sales between July and September, with 390 billion rupees on Friday.
New Delhi has reduced the supply of shorter-dated treasury bills this quarter and will raise 240 billion rupees later in the day, compared with 320 billion rupees every week in April-June period.
In the United States, yields remained elevated and closer to key levels, a break of which could spur a sharp move up, traders said.
The U.S. 10-year note was trading close to the crucial 3.85% mark, while the two-year yield, a closer indicator of interest rate expectations, was around 4.90%.
The market now awaits the June non-farm payroll data due on Friday, which acts as a guidance for interest rate moves from the Federal Reserve. Recent strong economic data has increased the bets of further Fed rate hikes, with the odds of an increase in July surging to around 83%.
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