MUMBAI: Indian government bond yields dip in early trades on Wednesday, tracking the decline in US Treasury yields and oil prices, but traders anticipate yields to consolidate around current levels before key events.
The benchmark 10-year bond yield was at 6.8353% as of 10:00 a.m. IST, compared with its previous close of 6.8551%.
“With no debt auction this week, some traders are adding positions ahead of the key events that are lined up over the next few days,” a trader with a state-run bank said.
“But there are high chances that bond prices give up some gains through the day.”
New Delhi will not hold its regular debt auction this week, while Indian markets will be shut on Friday for a local holiday.
The US presidential election is due next Tuesday and betting markets show Republican candidate and former President Donald Trump as the favourite to win the majority.
The 10-year US yield eased below the 4.25% mark, while traders await personal consumption expenditure data on Thursday, followed by October non-farm payroll data on Friday.
These major data points are likely to be key factors in the Federal Reserve’s monetary policy decision next Thursday.
Interest rate futures continue to indicate a 97% probability that the Fed will cut rates by 25 basis points next week, with aggregate rate cuts of 80 bps in the four policy meetings up to March 2025.
India bond yields may inch up tracking US peers
Oil prices stayed lower, with the benchmark Brent crude contract below $72 per barrel, after data showed a surprise drop in US crude and gasoline inventories.
India is one of the largest importers of crude and any change in prices has a direct impact on local retail inflation, a key metric for the central bank’s monetary policy decisions.
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