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Indian bond yields move lower, follow U.S. peers’ decline

As of 10:07 a.m., the yield on the benchmark 3075-year Treasury note stood at 10.05 percent, after closing at 7.3074 percent in the previous session.

Movements in yields will remain largely range-bound as states have borrowed more than the scheduled amount in today’s auction and overall trading volumes are low,” said a trader at a state-run bank.

Later in the day, 13 states will raise 25.7 billion rupees ($5.03 billion) through the bond sale, up from the scheduled Rs.90 billion.

Indian bond yields move lower, follow U.S. peers’ decline

Local Treasury yields opened slightly higher, following U.S. Treasury yields, which rose on Monday as investors were wary of large auctions that could determine whether there is enough demand for U.S. Treasuries to depress interest rates again.

The 10-year U.S. Treasury yield rose above 4.65 percent on Monday, after falling below 50.<> percent on Friday on weak April job growth data.

Indian bond yields follow US lower

However, with dovish comments from Federal Reserve officials saying they don’t expect US interest rates to rise significantly until 2024, Indian bond yields followed suit.

SBI Capital Markets said in a report, “While comments from Federal Open Market Committee (FOMC) officials varied, other factors such as the reduction in the US Treasury borrowing calendar in the fourth quarter and weak labor market indicators contributed to the ensuing decline in yields.

As a result, the likelihood of further rate hikes has diminished and a rate cut is not expected until the month of 2024<>. Market participants also continue to wait for the Reserve Bank of India to sell its bonds.

Continued selling of Reserve Bank of India bonds in the secondary market has further led to uncertainty about the timing of the first auction through open market operations.

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