MUMBAI: Indian government bond prices fell on Thursday, snapping a two-day rally, as U.S. peers declined, while traders await the domestic central bank’s debt purchase.
The yield on the 6.79% government bond maturing in 2034 rose to 6.3098% as of 10:10 a.m. IST, compared with the previous close of 6.2855%.
The yield on the new 10-year benchmark 6.33% bond maturing in 2035 rose to 6.2655% versus its previous close of 6.2398%.
Yields move inversely to prices.
Indian bond yields little changed as traders await fresh cues
We are seeing some selling pressure because of rising U.S. Treasury yields, but we could see some buying if the prices come down further, depending on how the central bank’s open market operation goes, a trader with a state-run bank said.
The ten-year U.S. Treasury yield was at 4.53%, up 4 basis points in the last two sessions.
Traders are now awaiting the Reserve Bank of India’s scheduled debt purchase worth 250 billion rupees later in the day.
In the last two sessions, private banks emerged as the largest buyers of Indian government bonds as traders with lighter books continued to build positions after a soft inflation print.
These lenders bought bonds worth 92.6 billion rupees ($1.08 billion) on a net basis on Tuesday, their highest single-day purchase in eight years and six months.
They bought 127 billion rupees worth of bonds in the last two sessions.
Meanwhile, New Delhi will sell bonds worth 250 billion rupees on Friday.
Rates
India’s overnight index swap rates rose in early trades, tracking the rise in domestic and U.S. Treasury bond yields.
The one-year OIS rate was up 2 basis points at 5.65%, while the two-year OIS rate was up 2 bps at 5.53%. The most liquid five-year OIS rate was 5 bps higher at 5.67%.
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