Flattish trend persists in India bond yields, traders eye Treasury move

MUMBAI: Indian government bond yields were moving sideways in the early session on Thursday as market participants continued to await fresh triggers after US yields started the New Year with an upward bias.

The 10-year benchmark bond yield was at 7.2149% as of 10:00 a.m. IST, following its previous close at 7.2156%.

The benchmark yield has risen four basis points (bps) in the first three sessions of 2024. “Locally as well as globally, the start is not what fixed income traders had wanted, which is giving an upward push to yields, and we would now wait for US data and local demand-supply dynamics to play out,” a trader with a private bank said.

US yields rose in intraday trade on Wednesday, with the 10-year yield briefly inching above 4%, before ending lower as investors digested data and the minutes of the Federal Reserve’s December meeting to gauge whether the US economy is set for a soft landing.

Fed officials launched an expansive debate about a coming turn in the US monetary policy, raising fresh concerns about how long the economy could hold up under current high interest rates, according to the minutes.

Even as markets expect the Fed to cut rates in March, the probability has eased to 73% from around 90% last week, according to the CME Fedwatch tool.

Investors will now eye the December non-farm payroll data, due after Indian market hours on Friday, for further cues.

Back home, traders remained worried about heavy supply in the last quarter of the financial year as states aim to raise 4.13 trillion rupees ($49.58 billion), while the central government will sell bonds worth 2.37 trillion rupees, taking the aggregate supply to 6.5 trillion rupees.

Meanwhile, traders continued to monitor the pace of foreign investments in government bonds after 2023 saw such inflows jump to the highest level in six years.

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