MUMBAI: Indian government bond yields fell marginally in early deals on Thursday, as underlying market sentiment continued to be positive on bets of policy rate cuts.
The yield on the new benchmark 10-year bond was at 6.2017% as of 10:00 a.m. IST, compared with the previous close of 6.2062%.
The 2034 bond yield was at 6.2496% after settling at 6.2449% on Wednesday.
“Traders are only focused on local factors for now, ignoring what is happening in the rest of the world, and hence we are expected to see a further rally in bond prices in the coming days,” a trader with a primary dealership said.
Bond yields have declined for two straight sessions as investors continue to bat for more rate cuts from the Reserve Bank of India in the coming months.
State-run banks have net bought over 260 billion rupees ($3 billion) of bonds over the last five sessions, further pushing yields lower.
Traders await the central bank’s dividend transfer to the government for the previous financial year.
India bond yields witness upside bias as Treasury yields spike
Economists expect the central bank to transfer a record surplus this year, surpassing the 2.1 trillion rupees in the previous year.
US Treasury yields jumped on Wednesday due to a weak auction, as investors continued to monitor the progress of a tax bill in Congress, which will worsen the US budget deficit.
The 10-year US yield hit a three-month high and stayed around 4.60% mark, having risen over 40 basis points in May.
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