MUMBAI: Indian government bond yields ended largely flat on Thursday, with investors awaiting clarity on the central bank’s liquidity stance and a key U.S. jobs report for further cues.
The yield on the benchmark 10-year bond ended at 6.2875%, after closing at 6.2892% in the previous session. The five-year 6.75% 2029 bond was at 5.9587% after ending at 5.9522% on Wednesday.
The Reserve Bank of India’s 850 billion rupee ($9.96 billion) variable rate reverse repo matures on Friday, with markets eyeing a follow-up move due after hours on Thursday to see if the central bank steps up liquidity withdrawal as surplus cash and soft overnight rates persist.
Meanwhile, U.S. non-farm payrolls data due later on Friday could raise odds of faster Fed rate cuts, especially after June’s private payrolls unexpectedly fell. Markets now see a 25% chance of a July cut and fully price one in for September, CME FedWatch shows.
India bond yields dip, tracking US Treasury peers, oil prices
Back at home, New Delhi will sell 320 billion rupees of longer duration bonds on Friday, with the supply likely to challenge investor appetite, after tepid demand for benchmark paper last week.
“The market is likely to consolidate within a range in the benchmark security for the visible future, and will wait for fresh triggers to move beyond,” said Prashant Pimple, CIO fixed income at Baroda BNP Paribas Mutual Fund.
Rates
India’s overnight index swap rates were barely changed, as traders await the VRRR quantum as well as Fed decision.
The one-year ended at 5.51%, while the two-year OIS rate was at 5.46%. The liquid five-year dipped marginally to 5.65%.
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