MUMBAI: Indian government bonds were largely flat on Wednesday as investors awaited inflation data from India and the U.S, while underlying sentiment remained upbeat ahead of the central bank’s debt purchase a day later.
The benchmark 10-year yield was at 6.6965% as of 10:00 a.m. IST, compared with its previous close of 6.6983%.
“For the day, there is nothing much to do at these rates, and if at all there is any action, that would be only if the Indian inflation figure is not in line with expectations on either side,” a trader with a private bank said.
India’s consumer inflation likely fell sharply to a five-month low of 4.60% in January from 5.22% in December on slowing food price rises, per economists polled by Reuters.
The data will be released at 4:00 p.m. IST, followed US by inflation figures that are expected after Indian market hours.
Economists polled by Reuters expect the core US consumer price index to increase slightly to 0.3% for January and rise to 2.9% for the 12 months to January.
Meanwhile, India’s bond market is upbeat after the central bank doubled its quantum of debt purchases to 400 billion rupees ($4.62 billion).
India bond yields seen easing after central bank doubles debt buy
The Reserve Bank of India’s (RBI) heavy intervention in the forex market this week could be why the central bank is raising the quantum, traders have said.
The upcoming operation has limited a potential impact from higher US Treasury yields, which rose overnight, with the 10-year yield crossing the 4.50% mark after the Federal Reserve Chair said the central bank is not in a rush to cut rates.
Investors have priced in about 35 basis points of policy easing for the rest of 2025, with the first reduction now expected in July or September.
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