MUMBAI: Indian government bonds are expected to be little changed in early deals on Monday, with focus on the local central bank’s bond purchase and the U.S. monetary policy decision.
The benchmark 10-year yield is likely to move between 6.68% and 6.72%, a trader with a private bank said, compared with its previous close of 6.6967%.
“There is nothing much to act upon with the 10-year yield at 6.70%, and we should see sideway moves,” the trader said.
“Going into the week, the major action can be seen once the Fed decision and commentary on future interest rate trajectory is out.”
The Federal Reserve is expected to keep interest rates unchanged in its policy decision due after Indian market hours on Wednesday, but focus would be on guidance and updated dot plot.
Barclays anticipates the summary of economic projections to show higher inflation and unemployment projections, and lower growth, while it expects the median dots to show one 25 basis points rate cut in 2025, and two each in 2026 and in 2027.
Indian bond yields seen flat, tariff uncertainty overshadows inflation optimism
Interest rate futures are anticipating 65 bps of cut in 2025, down from just above 75 bps early last week amid rising concerns over the potentially inflationary impact of tariffs as trade wars between the U.S. and its trading partners escalate.
Meanwhile, the Reserve Bank of India is set to buy bonds worth 500 billion rupees ($5.75 billion) on Tuesday, which traders believe will be the last for this financial year. The RBI has injected over 5 trillion rupees into the banking system since mid-January through bond purchases, forex swaps and early-April maturity repos.
Traders also anticipate another rate cut from the RBI in April after February retail inflation eased to 3.61% in February, the lowest level since July and also down from 4.26% in January.
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