MUMBAI: Indian government bond yields were little changed in the early session on Friday, as market participants awaited the fresh supply of debt, while the focus was also on a key US jobs data due after market hours.
The benchmark 10-year yield was at 7.1620% as of 10:00 a.m. IST, following its previous close of 7.1598%.
New Delhi aims to raise 280 billion rupees ($3.36 billion) through a sale of bonds later in the day, which includes 100 billion rupees of a 15-year paper.
“With benchmark yield at 7.15%, there is no appetite for bulls to keep on adding, and once we have the US data, we could see some directional push on Monday,” a trader with a state-run bank said.
US Treasury yields slipped on Thursday, with investor sentiment bolstered by the Federal Reserve’s less-than-hawkish stance that suggested rate cuts were on the table even though inflation remained stubbornly above the 2% target.
The US 10-year yield has eased below 4.60%, with investors focused on the April non-farm payrolls data to gauge the Fed’s interest rate trajectory.
Earlier this week, the Fed held interest rates steady and sounded less hawkish than feared, practically ruling out any further rate hikes.
India bonds not reacting to strong domestic growth, yields little changed
The probability of a rate cut in September has now risen to 61%, from less than 50% earlier in the week, while investors now expect around 40 basis points (bps) of rate cuts in 2024, up from around 35 bps earlier this week, according to CME’s FedWatch Tool.
The benchmark Brent crude contract remained below $85 per barrel, which is also supporting sentiment.
Traders will continue to keep an eye on activity from foreign investors over the coming days after they posted their biggest monthly sale in four years in April, which most analysts feel is an aberration.
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