MUMBAI: Indian government bond yields remained subdued on Thursday as bullish sentiment prevailed around bets of another large US interest rate cut, while traders awaited the borrowing plan for October-March.
The benchmark 10-year yield was at 6.7274% as of 10:00 a.m. IST, compared with its previous close of 6.7355%.
The yield had declined to 6.7284%, its lowest since Feb. 22, 2022, in the opening minutes of trade.
“Local bond market is now in complete control of the bulls and there are multiple factors like hopes of another large rate cut from the Federal Reserve, some monetary policy easing from the local central bank and some cut in planned supply,” a trader with a state-run bank said.
The central government is likely to announce the country’s market borrowing plan for October-March later in the day, two sources told Reuters on Wednesday.
New Delhi aims to raise 14.01 trillion rupees ($167.52 billion) through bond sales in the current fiscal year, with around 6.61 trillion rupees of supply due for the second half.
The government will sell bonds worth 340 billion rupees in its last debt auction for the first half on Friday, and this includes liquid five-year and 15-year bonds.
Meanwhile, interest rate futures are predicting a 60% probability that the Fed will cut rates by another 50 basis points in November, with aggregate cuts for 2024 seen around 77 bps.
India bond yields steady ahead of $4bn state debt sale
The Fed had slashed rates by a larger-than-usual 50 bps earlier this month, and guided another 50 bps of cuts for the rest of 2024.
The Reserve Bank of India’s monetary policy decision is due in the second week of October, and some market participants are anticipating some easing in terms of guidance or policy stance, which is further boosting sentiment.
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