MUMBAI: Indian government bond yields were little changed on Friday, as market participants largely ignored a sharp jump in the domestic economic print while digesting the latest U.S data.
The benchmark 10-year yield was at 7.0682% as of 10:00 a.m., following its previous close of 7.0764%.
India’s economy grew 8.4% in the October-December quarter, its fastest pace in one-and-half years, much faster than market estimates of 6.6% and also quickened from 7.6% in the previous three months.
Asia’s third-largest economy revised its growth estimate for the current fiscal year to 7.6% from 7.3%.
Meanwhile, the US personal consumption expenditures (PCE) price index rose 0.3% last month, against a gain of 0.1% in December.
For the 12 months through January, PCE inflation rose 2.4% - the smallest on-year increase since February 2021.
“US data was not very bearish, and hence market is reacting to that a bit, while growth though high, is expected to ease in coming quarters, so any major change in central bank strategy is unlikely,” trader with a private bank said.
However, economists pointed out to a more modest increase in India’s gross value added (GVA), a measure of total value of goods and services produced in the economy.
India bonds yields seen remaining flattish; set for fourth monthly fall
Excluding volatile components like valuables, discrepancies and inventories the underlying core GDP growth slowed to 4% on-year from 4.7% in previous quarter, Nomura said, maintaining its call of 100 basis points of rate cuts starting from August.
In February, the Reserve Bank of India kept rates unchanged for a sixth consecutive time and reiterated its commitment to meet 4% inflation target on a sustainable basis.
Meanwhile, the 10-year US bond yield eased slightly but remained above 4.25%, as the PCE data did little to change expectations of the Federal Reserve’s rate cut cycle.
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