MUMBAI: Indian government bond yields edged up cautiously on Monday, the start of an important week that will see Donald Trump assuming charge as US President, with the focus on his commentary on policies and tariffs.
The 10-year bond yield was at 6.7710% as of 10:00 a.m. IST, compared with its previous close of 6.7653%.
The “Focus has completely shifted to the major global event (Trump’s inauguration) as we enter into a new world in terms of policies and how they will make an impact on different asset classes,” a trader with a state-run bank said.
The President-elect has pledged to impose 10% duties on all US imports and 60% on goods coming in from China.
Treasury yields stayed largely unchanged on Friday.
The 10-year yield, though, eased 16 basis points last week after US inflation data and commentary from a Federal Reserve official supported bets of easing monetary policy.
US rate futures have priced in around 38 basis points of rate cuts in 2025 – compared with a trough of 26 bps before the inflation data – with a 66% chance of the next cut in June. Back home, the focus remains on the Reserve Bank of India’s liquidity management and the actions of foreign investors.
Last week, the RBI said it would conduct daily fund infusions through overnight variable rate repo auctions until further notice.
India bond yields rise in lead up to domestic inflation data
However, market participants have argued this will only ease the pressure on overnight rates and not infuse durable liquidity into the banking system.
Meanwhile, foreign inflows into government bonds have slowed and will fall short of expectations over the next two-and-a-half months, investors said.
Foreign investors have net sold bonds worth 25 billion rupees ($289.21 million) so far in January amid a rapid pick-up in Treasury yields and a decline in the rupee.
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