MUMBAI: Indian government bond yields did not react much to US Treasuries reversing some of their recent gains on Wednesday, as market participants awaited key economic data from India as well as the United States.
The benchmark 10-year yield was at 6.9897% as of 10:00 a.m. IST, following its previous close at 6.9883%.
“We are still in the consolidation zone, and maybe, after the inflation data we can see bonds moving in any firm direction,” a trader with a primary dealership said.
US retail inflation data is due post Indian market hours on Thursday.
A Reuters poll estimates the reading at 0.1% month-on-month, while consumer prices for 12 months to June are expected to have risen 3.1%.
India’s retail inflation print is due after market hours on Friday, and a Reuters poll shows consumer price inflation edged up in June, snapping five months of declines, largely because of a jump in vegetable prices.
The poll of 54 economists forecasts retail inflation rose to 4.80% year-on-year from 4.75% in May.
Meanwhile, US bond yields ended higher on Tuesday, after witnessing four straight sessions of decline, with the 10-year yield rising above the 4.30% mark.
Yields rose after Federal Reserve Chair Jerome Powell in prepared remarks to US Congress said that he does not want to send any signals about the timing of interest rate cuts, even while acknowledging that inflation was easing.
India bonds not reacting to strong domestic growth, yields little changed
Still, the probability of a 25 basis point Fed rate cut in September stayed close to 75% while bets of 50 bps cuts in 2024 also remained intact, according to CME FedWatch Tool.
New Delhi will raise 220 billion rupees ($2.64 billion) through sale of bonds on Friday, and will raise 200 billion rupees from sale of Treasury bills later in the day.
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