MUMBAI: Indian government bond yields are likely to swing up in early deals on Wednesday as investors will trade cautiously following New Delhi’s military operation in Pakistan and Pakistan-occupied Kashmir.
The benchmark 10-year yield is expected to test 6.40% at the open, a trader at a primary dealership said, after closing at 6.3508% in the previous session.
Some buying is also expected if the 10-year yield trades in the 6.40%-6.42% range, traders said.
“Bond (yields) should open higher because of the escalating situation at the border,” a trader at a private bank said.
India bond yields rise on profit booking, traders eye central bank bond purchase
Traders will also watch for the US Federal Reserve’s policy decision due later in the day to gauge the United States’ interest rate trajectory, which could affect domestic rates.
While the overall sentiment will likely remain cautious, investors will look forward to the Reserve Bank of India’s bond purchase worth 250 billion rupees later this week.
Rates
India’s overnight index swap rates are expected to inch higher in early trading, as there will be higher paying bias amid rising border tensions.
The one-year OIS rate was at 5.63%, while the two-year OIS rate was at 5.50%, and the most liquid five-year OIS rate was at 5.63%.
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