MUMBAI: Indian government bond yields rose marginally in early trading on Monday, with the benchmark yield hovering near a key level as market participants eyed fresh triggers amid cautious sentiment on debt sale plans and higher oil prices.
The 10-year 7.18% 2033 bond yield was at 7.3500% as of 10:00 a.m. IST, after ending at 7.3412% in the previous session. On Friday, the yield jumped 13 basis points, its biggest single-session rise since Aug. 5, 2022.
“A large buy number from state-run banks on Friday is keeping yields somewhat under control today, with eyes on bond sale details, as well as oil prices after latest geopolitical turmoil,” trader with a private bank said.
The Reserve Bank of India on Friday kept rates unchanged as expected, but said it plans to conduct open market sale of bonds through auctions to manage liquidity in the system.
Bond yields jumped after the comment, and traders expect yields to remain elevated while uncertainty over the actual supply of papers prevails.
The RBI has sold bonds worth 84.90 billion rupees ($1.02 billion) via screen-based operations in five weeks to Sept. 29, to drain additional liquidity, as it withdrew incremental cash reserve ratio in phases.
India central bank guidance to provide direction to flattish bond yields
Oil prices have also surged, with the benchmark Brent crude contract nearing $90 per barrel after clashes between Israeli and Hamas forces over the weekend deepened political uncertainty across the Middle East.
Palestinian group Hamas on Saturday launched the largest military assault on Israel in decades, killing hundreds of citizens and triggering a wave of retaliatory Israeli air strikes on Gaza that continued through Sunday.
Meanwhile, US yields also jumped on Friday, with the 10-year yield rising to 4.8870%, a fresh over 16-year high after data showed that employers added 336,000 jobs in September.
This was sharply higher than 170,000 according to economists’ expectations and also up from 227,000 in August, reiterating bets of a stronger economy and higher-for-longer interest rates.
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