MUMBAI: Indian government bond yields rose in early trading on Friday, after New Delhi kept its market borrowing for October-March in line with budget estimates and made no major changes to the pattern of issuance.
The benchmark 10-year yield was at 6.7234% as of 10:00 a.m. IST, compared with its previous close of 6.7178%, which was the lowest since Feb. 21, 2022.
India will sell bonds worth 6.61 trillion rupees ($79 billion) from October through March, it said on Thursday. The government had projected a gross market borrowing of 14.01 trillion rupees for April-March.
It will sell 340 billion rupees of bonds later in the day.
“The market was aggressively bullish in terms of a borrowing cut or lower supply in the 10-year, but since both these have not seen the light of the day, there is some position trimming,” a trader with a primary dealership said.
The tailwinds for the bond markets are likely to continue amid a fiscally-prudent government toeing a consolidation path, robust demand by long-term domestic institutional investors and foreign inflows, according to Upasana Bhardwaj, chief economist at Kotak Mahindra Bank.
Meanwhile, US bond yields rose after strong data, including an unexpected drop in jobless claims, led traders to bet that the Federal Reserve will cut rates again by 50 basis points at its November meeting.
India’s 10-year bond yield hits 31-month low; traders eye debt supply
The Fed had slashed rates by 50 bps last week, and had guided for another 50 bps of cuts in 2024. The interest rate futures market has assigned a higher probability of another 50-bp reduction.
The odds have now eased to 49% from 60% earlier.
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