Indian bond yields flattish as hunt for cues continues

Thursday,   25-Apr-2024   10:36 AM (IST)

Indian government bond yields were largely unchanged in early trading on Thursday, as traders await fresh triggers in the form of local debt supply and key economic data in the United States for cues on interest rates. The benchmark 10-year yield was at 7.1968% as of 9:45 a.m. IST, following its previous close at 7.1852%. New Delhi will sell bonds worth 320 billion rupees ($3.84 billion) on Friday, which includes 200 billion rupees of the 7.10% 2034 paper. Bond yields declined in the first two days of the week, before giving up some of the fall on Wednesday, as oil prices and U.S. yields continued to be around levels where a further upside is possible. U.S. Treasury yields moved higher, with the 10-year yield around 4.65%, as traders waited for U.S. growth data due later in the day, followed by personal consumption expenditures (PCE) data for March due after Indian market hours on Friday. Both datasets would be a key influence on the Federal Reserve's monetary policy outlook at its next decision due on May 1. Hotter-than-expected inflation reading for March already pushed back expectations of rate cuts, with investors now pricing in the possibility of around 42 basis points (bps) of rate cuts by the end of this year, according to CME's FedWatch Tool. Meanwhile, oil prices eased slightly as concerns over supply disruption from conflict in the Middle East have eased, though not completely ruled out, as the benchmark Brent crude contract continues to remain around $87 per barrel. Elevated crude prices could impact India's retail inflation as the nation is one of the largest importers of the commodity.