MUMBAI: Indian government bond yields ended higher to wrap up the last trading session of the week, which saw little moves on either side due to a lack of strong directional triggers as debt auctions added to supply.
The benchmark 10-year bond yield ended at 6.8495%, compared with its previous close of 6.8204%. For the week, the yield rose 3 basis points.
New Delhi raised 320 billion rupees ($3.81 billion) through the sale of bonds, which included 220 billion rupees of the new 6.79% 2034 bond that will replace the existing benchmark note soon.
The bond yield neared 6.80% levels after the auction result, and ended at 6.8046% “Bond yields will be rangebound in the upcoming week, which hardly has any triggers,” a senior trader with a private bank said.
Meanwhile, the 10-year US yield stayed around the 4.20% mark as traders braced for a less aggressive Federal Reserve rate cut path and the outcome of the US presidential election on Nov. 5.
Interest rate futures indicate a 95% probability that the Fed will cut rates by 25 bps next month.
India bond yields may see uptick after central bank policy minutes
Meanwhile, market participants remained divided over the Reserve Bank of India’s next policy move, especially after the minutes of the recent meeting showed most members were focused on inflation management.
India cannot risk another bout of inflation and the monetary policy committee (MPC) must adopt a cautious approach to lowering interest rates, members said in the minutes.
The MPC had kept the repo rate unchanged at 6.50%, while changing its policy stance to ‘neutral’.
“The offshore interest rate markets are re-processing and re-calibrating the slew of stronger than expected data,” said Rajeev Mohan, President - Treasury & Global Markets, Kotak Mahindra Bank.
The RBI speech on getting the timing right on the move for balance between inflation and growth will probably elongate the wait for lower rates in India,“ he added.
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