MUMBAI: Indian government bond yields persisted with a flattish trend in the early session on Friday as traders ignored growth data, which was in line with estimates, with the focus turning to the demand-supply dynamics at debt auction.
The benchmark 7.26% 2033 bond yield was at 7.1693% as of 10:00 a.m. IST, after ending the previous session at 7.1655%, a trader with a private bank said.
New Delhi aims to raise 390 billion rupees ($4.72 billion) through the sale of bonds, with the auction including 120 billion rupees of liquid 14-year notes.
“The focus stays on demand for bonds and the cutoffs. The growth data has done little to move the needle on either side as far as yields are concerned,” a trader with a private bank said.
India bond yields seen little changed ahead of key growth data
India’s economy grew at its quickest pace in a year in the April-June quarter, and gross domestic product (GDP) expanded 7.8% on an annual basis, accelerating from the 6.1% growth recorded in the March quarter and topping a Reuters poll forecast of 7.7%.
Meanwhile, U.S. yields remained largely steady, with the 10-year yield hovering around the crucial 4.10% handle, as investors await August non-farm payroll data due later in the day.
The data would provide more clarity on the Federal Reserve’s next move when it meets later in the month. Despite Fed Chair Jerome Powell’s hawkish commentary last week, the market believes the Fed may not hike rates anymore, with odds of a September hike at just around 11%.
Traders will also keep an eye on the domestic inflation trajectory, especially after the government cut cooking gas prices. India’s retail inflation spiked to a 15-month high of 7.44% in July from 4.87% in June.
Also in focus are the developments from consultations between traders and the central bank about the government’s second-half borrowing programme.
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