MUMBAI: Indian government bond yields are likely to ease in early trading on Monday, as US yields fell after data showed job growth slowed more than expected in October.
The 10-year benchmark bond yield is expected to move in the 7.28%-7.33% range, after its previous close of 7.3140%, a trader with a primary dealership said.
“The 10-year US yield has sharply fallen to around 4.50% level on Friday, so the local benchmark bond yield may open below 7.30% and sustain at that level,” the trader said.
The 10-year US Treasury yield fell to five-week lows on Friday after a key employment data came in cooler than economists anticipated. Nonfarm payrolls increased by 150,000 jobs last month, below economists expectations for a gain of 180,000.
US yields have been easing since the Federal Reserve’s monetary policy decision last week where it kept interest rates unchanged, on optimism that the central bank will not hike rates anymore. “Domestic rates and equities have been edgy before the Fed policy but seeing a rally in line with global asset classes. Rates are, however, seeing some downside risks from the lurking OMO (open market operations) sales threat and tighter liquidity conditions,” said Anitha Rangan, an economist at Equirus Group.
Market participants have raised concerns over declining trading activity in the bond market since the Reserve Bank of India (RBI) announced its plans to sell bonds via auctions.
The RBI net sold 28.25 billion rupees of government bonds via screen-based trades in the secondary market in week ended Oct. 27, lower than 41.75 billion rupees sold in the previous week.