MUMBAI: Indian government bond yields edged marginally higher on the last trading day of the month as market participants await fresh supply via a weekly debt auction to observe investor appetite.
The benchmark 10-year yield was at 6.8672%compared with its previous close of 6.8637%.
India will sell bonds worth 300 billion rupees ($3.58 billion) on Friday, including 200 billion rupees of the benchmark bond, taking its total outstanding to 1.60 trillion rupees.
“Strong demand for the benchmark could again see yield getting consolidate around 6.85% mark going into the data,” trader with a private bank said.
India will release its April-June economic growth data after market hours on Friday and a Reuters poll expects gross domestic product (GDP) to have grown an annual 6.9%, down from 7.8% in the preceding quarter, due to lower government spending amid national election.
DBS said, while a backward-looking GDP number is often an non-event, a 7% plus growth number is likely to douse expectations of an imminent dovish shift in the policy guidance, even as inflation slipped to a five-year low in July.
Meanwhile, the United States will release the personal consumption expenditures data, the Federal Reserve’s preferred gauge to measure inflation, also after Indian market hours.
A higher reading could dampen bets of aggressive easing. While a rate cut is certain next month, bets are split between a 25-basis-point and a 50-bp cut, with odds of the latter remaining around 33%.
For 2024, markets are expecting cuts of just above 100 bps.
Indian 10-year bond yield a tad above 6.85% as traders eye key data
US yields rose on Thursday after data showed the world’s largest economy grew 3.0% year-on-year in April-June, revised up from the 2.8% expansion reported last month, which indicates the economy was on solid enough footing.
Fed Chair Jerome Powell last week delivered his strongest signal that interest rates will come down in September.
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