MUMBAI: Indian government bond yields rose early on Friday as high inflation reading in the US sent Treasury yields up, making traders ignore a cooler consumer price print at home, while a fresh sale of debt by New Delhi added to caution.
India will raise 340 billion rupees ($4.09 billion) through the sale of bonds later in the day, which includes the liquid 14-year bond.
The 10-year benchmark 7.18% 2033 bond yield was at 7.3188% as of 10:00 a.m. IST, after ending at 7.2977% in the previous session.
“As expected, the impact of Indian inflation is not visible as the market is tilted towards rising US yields after higher inflation reading, and debt supply is also adding to the fatigue,” trader with a primary dealership said.
India’s retail inflation eased to a three-month low in September but remained above a target of 4% the central bank has signalled would be key before easing rates.
Meanwhile, in the US, yields rose after data showed consumer prices in the world’s largest economy came in higher than expected, suggesting that the Federal Reserve could raise interest rates one more time this year.
Inflation rose 0.4% last month against 0.6% in August.
Indian bond yields flat ahead of inflation data
For the 12 months through September, the CPI advanced 3.7% after rising by the same margin in August.
Economists polled by Reuters had forecast the CPI gaining 0.3% and climbing 3.6%.
The 10-year US yield jumped 20 basis points from its day’s low on Thursday, and was hovering around 4.70% in Asian hours on Friday.
Meanwhile, traders continued to eye the first sale of bonds from the Reserve Bank of India after it announced its plans to sell bonds via auctions, with broad expectations of sale of 500 billion rupees in coming weeks.
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