MUMBAI: Indian government bond yields were marginally higher in the early session on Tuesday as states are set to raise a higher-than-scheduled quantum through the sale of bonds, while constant profit booking further weighed on sentiment.
The benchmark 10-year yield was at 7.0169% as of 10:00 a.m. IST, following its previous close of 7.0147%.
The yield had eased 7 basis points in the last six sessions.
Bond yields witnessed a decline recently, with the benchmark bond yield easing to 7.0056% on Monday, the lowest level in nine months, as US Treasury yields witnessed a constant drop.
“With the 7% wall holding strongly for the benchmark, we would see some consolidation.
The benchmark may remain in the 7.02%-7.03% zone for the day, with focus on heavier-than-usual state debt auction,“ a trader with a private bank said.
Indian states aim to raise 355.44 billion rupees ($4.30 billion) through the sale of bonds, outpacing the scheduled quantum for the first time in seven weeks.
Continuous decline in US yields may push Indian bond yields lower
The quantum is not only higher than scheduled but also the highest since the end of March 2023.
Bonds yields dropped on Monday tracking a decline in Treasury yields as weakness in economic data and the latest comments from Federal Reserve Chair Jerome Powell have increased chances of a rate cut in June.
The 10-year US yield stayed below 4.10%, after recently hitting 4.35%, with traders keenly eyeing the US inflation data due later in the day.
This would be the last major economic data before the Fed policy decision next week.
The odds for a rate cut in June stand at around 69%, up from 64% last week, according to the CME FedWatch tool.
Meanwhile, India’s retail inflation data for February is also due later in the day and the reading is expected to print at a four-month low of 5.02%, according to a Reuters poll.
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