MUMBAI: Indian government bond yields may inch lower in early deals on Thursday as US Treasury yields dipped after the Federal Reserve maintained that it will reduce interest rates twice more in 2025.
The benchmark 10-year bond yield is likely to move between 6.65% and 6.68%, a trader with a private bank said, compared with its previous close of 6.6714%.
“Bonds have already seen bullish moves this week, and we may see some bit of an extension to the same today, but the benchmark bond yield should see a hard stop at 6.65% and any move below this level is unlikely,” the trader said.
US bond yields eased after Fed policymakers indicated on Wednesday that they still anticipate reducing borrowing costs by half a percentage point by the end of this year.
Indian bond yields may dip as RBI surprises with another debt purchase
Some traders had speculated that the Fed may lower its rate easing forecast to 25 basis points due to the ongoing tariff war.
Interest rate futures are pricing in around 66 basis points of US rate cuts in 2025, up from around 58 bps before the Fed decision.
A reactive Fed would likely mean that policy shifts would be slow but increases the odds that it would have to play catch up, DBS said.
Bond market sentiment remains positive as the Reserve Bank of India will buy bonds worth 500 billion rupees ($5.8 billion) on March 25.
The central bank has already injected over 5.50 trillion rupees into the banking system since mid-January through a combination of primary and secondary market bond purchases, fx swaps and early-April maturity repos.
Comments
Comments are closed for this article.