MUMBAI: Indian government bond yields moved sideways in a thinly-traded market early Wednesday, as investors awaited the US Federal Reserve’s monetary policy decision and forward guidance.
The 10-year benchmark bond yield was at 7.3548% as of 10:00 a.m. IST, after ending at 7.3558% in the previous session.
The Fed decision is due after close of Indian bond market on Wednesday.
Investors expect no change in interest rates in the world’s largest economy, but there is a 25% probability of a hike in December.
The Fed has raised rates by 525 basis points since March 2022 as it battled inflationary pressures.
US Treasury yields rose, with the 10-year above the 4.90% mark. Oil prices eased, with the benchmark Brent crude contract around $85 per barrel, as data showed rising output from OPEC and the US “With no major fundamental change in local factors, the market will be glued to the commentary after the Fed decision, to gauge if there is one more rate hike on the cards,” a trader with a primary dealership said.
India bond yields flattish as traders eye cues on RBI debt sales
India’s 10-year bond yield has moved in a narrow 7.30%-7.39% range over the last dozen sessions. Bond yields rose in October, after the Reserve Bank of India (RBI) surprised the market with its plan to sell bonds via auctions and as US yields rose for the sixth consecutive month.
The market expects around 500 billion rupees of RBI bond sales this quarter.
The central bank is likely to meet select banks later this week, with the discussion likely to be focussed on banking system liquidity.
New Delhi will sell 300 billion rupees ($3.60 billion) of bonds on Friday, which includes a new 50-year paper.
It will sell Treasury bills worth 240 billion rupees on Wednesday.
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