MUMBAI: Indian government bond yields were largely unchanged in early deals on Thursday amid consolidation following declines earlier this week as foreign banks piled up debt purchases.
The 10-year bond yield was at 6.7667% as of 10:00 a.m. IST, compared with its previous close of 6.7678%.
The benchmark bond yield eased to a three-week low of 6.73% on Tuesday, amid aggressive purchases from foreign banks.
These lenders had bought bonds worth over 125 billion rupees ($1.45 billion) in the first two days of the week on a net basis, clearing house data showed.
“Since the time foreign banks paused, we have seen some reversal in yields as they are in a consolidation phase,” a trader with a state-run bank said.
“The yield may remain in the 6.75%-6.77% band for today and tomorrow, as we are unlikely to see any major move in the absence of any important trigger,” the trader added.
US bonds have sold off this week following data that indicated a healthy labour market and an acceleration in services activity, which suggested the Fed’s forecast that it will cut rates only twice this year is likely to hold up.
The US central bank signalled a slower pace of rate cuts at its December meeting.
India bond yields may press higher tracking US rates
The minutes of this meeting released on Wednesday showed Fed officials agreed that inflation is likely to continue to slow this year, but they also saw a rising risk that price pressures may remain sticky amid concerns about the impact of policies expected from the incoming Trump administration.
As a result, the 10-year US yield hit a more than eight-month high of 4.73% on Wednesday.
However, it eased to around 4.67% in Asia hours on Thursday.
Interest rate futures are currently pricing in just 41 basis points of rate cuts in 2025, less than the Fed’s prediction of 50 bps of reductions.
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