MUMBAI: Indian government bond yields were marginally higher in early deals on Thursday, after rising on the first day of 2025, as traders worried about rising supply in the last quarter of the financial year.
The 10-year bond yield was at 6.7901% as of 9:45 a.m. IST, compared with its previous close of 6.7813%.
The central and state governments are set to raise an aggregate of 7.52 trillion rupees ($87.72 billion) via bond sales between January and March, when the financial year ends.
This includes a record 4.73 trillion rupees from states and 2.79 trillion rupees from the central government.
On Friday, New Delhi will sell bonds worth 320 billion rupees, including 220 billion rupees of the benchmark paper.
“The market is back to the basics of demand-supply dynamics and the first test would be cutoffs for tomorrow’s debt auction, which will give clarity on investor appetite to absorb the heavy supply scheduled for three months to March,” a trader with a state-run bank said.
The demand from foreign investors will also remain under scrutiny, with investors anticipating the inflows will come off the record highs of 2024.
India bond yields rise in lead up to domestic inflation data
The 10-year yield slipped 42 basis points in 2024, the most in four years, as the government’s fiscal discipline and inclusion of debt in global indexes boosted demand.
Investors now await the start of the domestic rate easing cycle, which could come as early as next month. US Treasury yields will also be in focus, especially as Donald Trump takes charge as US president later this month.
The 10-year US bond yield gained 72 bps in 2024 to notch its fourth consecutive yearly rise.
The Federal Reserve has halved its rate cut forecast for 2025 to 50 bps and the odds of a pause in January are at 89%, according to CME’s FedWatch Tool.
Comments
Comments are closed for this article.