MUMBAI: Indian government bond yields edged lower in early trade on Friday as investors stepped in after a late-session sell-off the previous day, though attention remained on the upcoming weekly debt auction.
The yield on the new benchmark 10-year bond was at 6.2121% as of 09:45 a.m. IST, compared with the previous close of 6.2339%.
The 2034 bond yield was at 6.2534% after settling at 6.2726%.
New Delhi will raise 270 billion rupees ($3.14 billion) through the sale of bonds on Friday.
The auction includes the liquid five-year bond, the yield on which has been below the central bank’s repo rate of 6.00% over the last few days, highlighting strong investor appetite for shorter end of the curve.
“Any uptick in bond yields is will persistently see buyers, with the new benchmark bond yield providing trading opportunities, as it moves above 6.20%,” trader with a private bank said.
Indian bond yields have been choppy this week, witnessing bouts of buying on bets of more policy easing, and some selling amid the constant upward move in US Treasury yields.
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The 10-year US yield eased on Thursday but stayed above 4.50%, as investors continued to monitor the progress of a tax bill that will likely worsen the US budget deficit.
Locally, the Reserve Bank of India is expected to cut interest rates for a third consecutive time on June 6.
Traders now await the central bank’s dividend transfer to the government, with economists expecting the amount to top the previous year’s 2.1 trillion rupees.