MUMBAI: Indian government bond yields continued to trade sideways on Thursday as market participants await fresh cues from US yields and the minutes of the domestic central bank’s latest policy meeting.
India’s benchmark 10-year yield was at 6.9739% as of 10:00 a.m. IST, following its previous close of 6.9746%.
“We are literally seeing bond ownership changing hands from state-run banks to other participants, with the benchmark yield consolidating in the 6.96%-6.98% zone,” a trader with a private bank said.
US yields stayed largely unchanged as markets were shut on Wednesday.
The 10-year yield was around 4.25% during Asian hours.
Markets are expecting the Federal Reserve to cut interest rates twice in 2024 after a recent softening of inflation in the United states.
This comes even after the Fed slashed its forecast to only one rate cut this year, down from three projected in March. Several Fed officials recently said they would be waiting for more US inflation data to form a view on rate cuts.
Back home, the Reserve Bank of India (RBI) will release the minutes of its latest policy meeting on Friday.
The central bank maintained status quo on rates and stance earlier this month as it aims to meet the 4% inflation target, even as two external members had voted for a change in stance and a rate cut.
Indian bond yields seen flat as traders seek directional cues
The RBI said on Wednesday that high food prices were impeding recent easing in inflation in India, adding that efforts to rein in prices remain a “work in progress”.
Earlier this week, RBI Governor Shaktikanta Das said India should avoid “adventurism” and continue to focus on bringing down inflation towards the 4% target.
Meanwhile, traders will keep an eye on foreign inflows into government bonds after their net purchases crossed the $10 billion mark in nine months of the announcement of their inclusion into JPMorgan’s emerging market debt index, due on June 28.
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