MUMBAI: Indian government bond yields ended higher on Friday, rising for a second consecutive week as a constant supply of debt weighed on investor appetite.
India’s 10-year benchmark bond yield ended at 7.2914%, after ending the previous session at 7.2803%.
For the week, the yield rose two basis points (bps), after rising five bps in previous week.
“Constant supply, especially from states has led to fatigue, and hence we have seen a slow uptick in yields even as US yields fell and there is no major negative trigger,” said Pankaj Pathak, fund manager - fixed income at Quantum AMC.
New Delhi raised 300 billion rupees ($3.60 billion) through the sale of bonds, which included 130 billion rupees of the benchmark note.
This comes after Indian states raised 358 billion rupees through bond sales, which was their highest quantum for the current financial year.
States have raised 1.79 trillion rupees in the current quarter so far, higher than 1.51 trillion rupees schedule and traders anticipate them to further outpace the calendar in December.
India bond yields flattish on lack of strong triggers
Traders also did not react in a big way to India’s growth data, despite the economy growing at a much faster pace than expected in the July-September quarter, raising expectations that Asia’s third-largest economy will outperform its own estimates for the full year.
The Indian economy expanded 7.6% in the September quarter, faster than the 6.8% forecast in a Reuters poll of economists and the Reserve Bank of India’s estimate of 6.5%.
Meanwhile, US Treasury yields were off their recent lows, with the 10-year yield rising back to 4.35% levels amid profit-booking.
It eased 53 basis points in November, its biggest such fall in over 12 years, on bets that the Federal Reserve will start cutting rates in the first half of 2024.
The probability of a rate cut in March is close to 50%, and that in May is close to 80%.
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