MUMBAI: Indian government bond yields were little changed in early session on Thursday in the run up to the latest inflation data at home, as well as in the United States.
The 10-year benchmark 7.18% 2033 bond yield was at 7.3024% as of 10:00 a.m. IST, after ending at 7.3049% in the previous session.
“For the time being, talks of open market sales have taken a temporary backseat, and the market is eyeing inflation. Any surprises on either side of expectations could give direction to the benchmark yield, which is steadying around 7.30% for now” trader with a private bank said.
India bond yields down, value purchase offsets open market sale concerns
Bond yields have eased in the past two trading sessions on value-buying, especially after the benchmark bond yield hit a seven-month high of 7.40% on Monday.
The yields on these securities rose for two straight sessions on Friday and Monday as the Reserve Bank of India (RBI) announced plans to conduct open market sales of bonds through auctions to absorb liquidity from the banking system.
The Indian central bank could sell around 500 billion rupees ($6.01 billion) of bonds under its plan, treasury officials told Reuters.
India’s retail inflation likely eased to 5.50% last month - within the RBI’s tolerance band - on moderating food price rises and government subsidies that offset a surge in the cost of crude oil, a Reuters poll found.
The RBI last week kept rates unchanged as expected but signaled that interest rates would remain high until inflation was closer to the 4% target.
Sentiment also got a boost as the benchmark Brent crude contract eased to trade around $85 per barrel, not showing any impact from the ongoing conflict in the Middle East.
U.S. yields have also come down, with the 10-year yield trading 30 basis points lower than its over 16-year high of 4.89% hit last week.
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