India bonds drop to 11-week low as RBI commentary adds to bearish cues
The yield on the benchmark 10-year bond ended over 2 basis points higher at 6.3505%, the highest since May 9, compared with a previous close of 6.3276%.
Bond yields move inversely to prices.
Traders pared positions after the weekly debt auction, as a slew of negative cues soured sentiment.
'While the auction was subscribed fully, there is no further incentive for fresh buying as rising U.S. yields, oil prices anddeclining rupee are all negative for bonds,' said Debendra Kumar Dash, senior vice president of treasury at AU Small Finance Bank.
The 10-year U.S. Treasury yield was at 4.4117% in Asian hours, up over 8 basis points from Tuesday's low of 4.33%. Meanwhile, oil prices rose 0.23% to $69.34 per barrel.
The central bank governor's fireside chat at a Financial Express event also curbed expectations for rate easing, traders said, prompting those who were betting on an August cut to pare positions.
India bonds end steady as lack of cues continue to dominate
Malhotra said monetary policy, being forward-looking, will place greater focus on the outlook for growth and inflation, rather than their current levels, when the policy panel meets on August 6.
With retail inflation falling to a six-year low and likely to hit a record low in July, calls for at least one more rate cut had ramped up.
Malhotra added that the bar for further easing is higher than it would have been if the stance was accommodative, though the central bank still has the flexibility to move the rates up, down or pause.
Rates
India's overnight index swap rates rose due to high paying pressure as traders unwound earlier receiving positions.
The one-year OIS rate ended 3 basis points higher at 5.53% and the two-year OIS rate rose nearly 5 bps to 5.51%. The liquid five-year OIS rate also rose 5 bps to 5.73%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
8 hours ago
- Business Recorder
South Korean shares hit four-year high on hopes of US trade deal
SEOUL: Round-up of South Korean financial markets: South Korean benchmark rose on Tuesday to their highest level in four years, as optimism grew around U.S. trade negotiations ahead of an August 1 deadline for higher tariffs. The benchmark KOSPI ended the session up 21.05 points, or 0.66%, at 3,230.57, its highest closing level since August 10, 2021. Korean Finance Minister Koo Yun-cheol said on Tuesday he would seek a mutually beneficial trade deal when he meets U.S. Treasury Secretary Scott Bessent for talks this week, just days before an August 1 deadline expires to avoid punishing tariffs. 'Trade uncertainty is easing after the U.S. signed a deal with Europe and the possibility increased that the deadline will be extended for China,' said Seo Sang-young, an analyst at Mirae Asset Securities. Among index heavyweights, chipmaker Samsung Electronics rose 0.28%, while peer SK Hynix gained 0.19%. Battery maker LG Energy Solution climbed 3.02%. Hyundai Motor and sister automaker Kia Corp were down 0.23% and up 0.19%, respectively. Steelmaker POSCO Holdings shed 2.01%, while drugmaker Samsung BioLogics rose 1.97%. Of the total 935 traded issues, 469 shares advanced, while 411 declined. Foreigners were net buyers of shares worth 605.4 billion won ($434.46 million). The won was quoted at 1,393.5 per dollar on the onshore settlement platform, 0.32% lower than its previous close at 1,389.1. The most liquid three-year Korean treasury bond yield fell by 0.3 basis point to 2.457%, while the benchmark 10-year yield fell by 2.9 basis points to 2.832%.
Business Recorder
9 hours ago
- Business Recorder
Indian refiner Nayara trims crude runs in wake of EU sanctions, sources say
NEW DELHI: Russia-backed Indian refiner Nayara Energy has reduced operations at its 400,000-barrel-per-day refinery in the aftermath of new European Union sanctions that targeted the firm, five sources familiar with the matter said. Privately-held Nayara, which runs India's third-biggest refinery at the port of Vadinar in the western state of Gujarat, controls nearly 8% of the country's total refining capacity of about 5.2 million bpd. The sanctions package unveiled on July 18 against Russia and its energy sector has made it tougher for Nayara to export its refined products, resulting in storage constraints, two of the sources said. Since the EU curbs on Nayara, traders have grown cautious in dealing with its fuel, trade and industry sources say. Last week, Reuters reported that at least two tankers skipped planned loadings at Vadinar while a tanker carrying a cargo of Russian crude was diverted away from the refiner. One source said Nayara was operating the refinery at 70% of capacity, while another put the figure at 80%. EU-sanctioned Indian refiner Nayara takes Microsoft to court over outage Nayara ran at more than 100% of its nameplate capacity in each of the three months through June, the most recent government data shows. All the sources sought anonymity because they were not authorised to speak to the media. Nayara did not immediately respond to a request for comment. Nayara typically exports at least four million barrels of refined products each month, including diesel, jet fuel, gasoline and naphtha, through traders. India has become the biggest buyer of seaborne Russian crude in the aftermath of Moscow's Ukraine invasion. Nayara, majority-owned by Russian entities including Rosneft, is a key buyer of Russian oil. Nayara's chief executive resigned after the sanctions and was replaced by Sergey Denisov, who had been its chief development officer, Reuters reported on Friday. On Monday, Nayara said it filed legal proceedings against U.S. software giant Microsoft following its suspension of services to the refiner. Nayara, based in the commercial capital of Mumbai, operates more than 6,000 fuel stations.
Business Recorder
9 hours ago
- Business Recorder
Indian rupee falls to four-month low on firmer greenback, state-run banks' dollar bids
MUMBAI: The Indian rupee declined to its weakest level since mid-March in early trade on Tuesday, as a slump in the euro sharply raised the dollar index, and demand for the greenback from state-run banks added to the pressure. The rupee hit a low of 86.9150 against the U.S. dollar before paring losses to 86.8725, down 0.2% on the day, as of 11:10 a.m. IST. In recent sessions, the Indian currency has also been troubled by persistent outflows from local equities, amid a tepid quarterly earnings season, alongside muted prospects of a U.S.-India trade deal ahead of the August 1 deadline. While India is still awaiting concrete developments in negotiations, sentiment surrounding a deal between the EuropeanUnion and the U.S. turned sour with leaders in France and Germany lamenting the outcome. The euro was last quoted a tad lower at 1.1584 after falling more than 1% against the dollar on Monday. Asian currencies, meanwhile, were moderately weaker between 0.2% and 0.4%. 'With net short dollar positions looking crowded and easing, the U.S. dollar could get some reprieve in the near term,' MUFG said in a note. Indian rupee slips but sidesteps firmer dollar as flows dominate price-action But the focus will also be on the Federal Reserve's policy decision due on Wednesday wherein a dovish tilt could lead to renewed U.S. dollar weakness, supporting the broader Asian FX outlook, the note added. On the day, traders also pointed to an uptick in very-near tenor dollar-rupee swap rates spurred by anticipation of IPO-related cash dollar inflows alongside maturity of the Reserve Bank of India's forward dollar positions at the end of the month. The spot-week USD/INR swap rate, for instance, was quoting at an implied rate of about 0.60 paisa per day, well above the prevailing overnight swap rate of about 0.30 paisa.
