Indian government bonds are expected to trade little changed in early deals on Friday, as market players await fresh supply from the weekly debt auction, while U.S. Treasury yields remain elevated.
The 10-year bond yield is likely to move between 6.76 per cent and 6.79 per cent, a trader with a private bank said, compared with its previous close of 6.7646%.
New Delhi aims to raise 22000 crore rupees ($2.56 billion) through sale of bonds later in the day.
“There are not many triggers, and bonds should be in thin range for the day, ahead of plethora of events that could provide some direction,” the trader said.
U.S. Treasury yields remain elevated, with the 10-year yield around 4.68 per cent in Asia hours ahead of a key jobs report that could determine the extent of monetary policy easing by the Federal Reserve.
The nonfarm payroll data for December will be out after Indian market hours, and could throw some light on whether the Fed’s forecast that it will cut rates only twice this year is likely to hold up.
U.S. yields have been rising on concerns that the incoming Donald Trump administration’s policies could reignite inflation in addition to boosting growth, leading to fewer rate cuts. The U.S. central bank signalled a slower pace of rate cuts at its December meeting.
Interest rate futures are currently pricing in just 43 basis points of rate cuts in 2025, less than the Fed’s prediction of 50 bps of reductions.
The benchmark bond yield in India eased to a three-week low of 6.73 per cent on Tuesday, amid aggressive purchases from foreign banks. However, these lenders later sold bonds as yields in the world’s largest economy rose sharply.
Key indicators
** Brent crude futures 0.3 per cent higher at $77.15 per barrel, after rising 1 per cent in the previous session
** Ten-year U.S. Treasury yield at 4.6811 per cent; two-year yield at 4.2640 per cent
** RBI to conduct 14-day variable rate repo auction for 2.25 lakh crore rupees
** India to sell sovereign bonds worth 22000 crore rupees
** RBI to set underwriting fees for 22000 crore rupees for sovereign bond auction ($1 = 85.8830 Indian rupees)
