MUMBAI: Indian government bonds edged higher on Wednesday as investors awaited local and U.S. inflation data later this week for cues on the rate trajectories.
The yield on the 10-year benchmark settled at 6.4790% versus the previous close of 6.4942%. Bond yields move inversely to prices.
Bonds were largely rangebound during the day and last-minute “technical buying” pushed up prices slightly, traders said.
India’s August inflation print, due on Friday, is pegged at 2.1%, compared with 1.55% in July amid a fading “base effect” and rising food prices, according to a Reuters poll.
U.S. President Donald Trump, in a marked shift of tone on Tuesday, expressed optimism that India and the U.S. could finalize a trade deal.
At the same time, Reuters reported that Trump has urged the European Union to impose 100% tariffs on China and India as part of a strategy to pressure Russia.
India bonds rise after government reaffirms fiscal, borrowing goal
Indian bond yields eased last week due to easing fiscal worries, but the market awaits support from the Reserve Bank of India.
“The market is eyeing some signal from the RBI on its rate easing trajectory, especially at a time when inflation is benign and Trump’s tariffs are creating uncertainty regarding growth,” said Alok Sharma, head of treasury at ICBC.
“Despite the rally from 6.60% to nearly 6.40%, the short positions in the market remain intact. There is not enough enthusiasm in the absence of cues from the RBI.”
Rates
India’s 1-to-5 year overnight index swaps ended slightly lower, with activity muted as traders awaited U.S. and India inflation data.
The one-year OIS rate was at 5.47%, while the two-year OIS rate ended at 5.44%.
The liquid five-year OIS rate closed at 5.6950%.