MUMBAI: Indian government bond yields declined at the start of the week, in which the central bank is expected to deliver yet another cut in its key policy rate, after wild upswings on Friday following surprising growth data.
The yield on the benchmark 10-year bond was at 6.2132% as of 10:00 a.m. IST, compared with the previous close of 6.2308% on Friday, when it jumped 5 basis points.
The five-year 6.75% 2029 bond yield was at 5.8523% after closing at 5.88%, and has been outpacing its 10-year counterpart in the last three months.
The yield on the 10-year bond fell 49 bps in March-May, while the five-year bond yield plunged 77 bps for the same period.
“Bulls hardly allowed any further upside on yields, and have been active right from the start. We anticipate yield to close around the 6.20% mark today,” a trader with a private bank said.
Data released before market hours on Friday showed India’s economy surged 7.4% in January to March, much faster than a forecast of 6.7% in a Reuters poll, and up from the 6.4% expansion in October-December.
India bonds seen steady as benchmark yield struggles to break below 6.20%
The Reserve Bank of India’s policy decision is due on June 6, in which it is widely expected to deliver a third straight 25-basis-point rate cut.
The RBI has cut 50 bps in 2025 so far and has infused around $100 billion into the banking system in December-May.
J.P.Morgan expects headline retail inflation to average around 3% in April-June, below the RBI’s 4% target, and believes the central bank has space to cut and will deliver a 25-bps cut this Friday. RATES
Overnight index swap (OIS) rates were barely changed, after seeing paying interest on Friday. The one-year OIS rate ended at 5.60% and the two-year OIS rate ended at 5.50% on Friday. They had not yet traded on Monday.
The most liquid five-year was marginally lower at 5.67%, after rising to 5.68% in previous session.
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