India bonds steady as traders await fresh cues
Synopsis Indian government bonds remained stable on Wednesday. This stability occurred due to the absence of new domestic factors. The yield on the benchmark 10-year bond was at 6.3090%. U.S. Treasury moves will be key for future bond movements. Foreign investors increased allocation to India's four-year paper. They found the yields attractive. Indian government bonds little changed on Wednesday in the absence of any fresh domestic triggers and shrugging off a decline in U.S. Treasury bonds.
ADVERTISEMENT The yield on the benchmark 10-year bond was at 6.3090% as of 10:05 a.m. IST after closing at 6.3090% on Tuesday. The five-year 6.75% 2029 bond yield was steady at 5.9875%, compared with Tuesday's close of 5.9880%.
"Bonds should remain rangebound for now as there aren't many domestic triggers. U.S. Treasury moves will be key," a trader with a state-run bank said.
The U.S. 10-year bond yield rose 1.4% to 4.49% on Monday, up 15 basis points in four sessions and nearing the crucial 4.50% mark. The yield edged slightly lower in Asian hours on Tuesday, hovering at 4.47%.
ADVERTISEMENT U.S. consumer prices rose 0.3% in June, marking the largest increase in five months. The uptick, driven by higher costs for some goods, suggests that tariffs are starting to show an impact on inflation, potentially prompting the Federal Reserve to hold off on rate changes until September.
ADVERTISEMENT Meanwhile, foreign investors increased allocation to India's four-year paper as they found the yields attractive, traders said. These investors net bought more than 13 billion rupees ($151.2 million) of 7.26% 2029 bond in the last two trading sessions, CCIL data showed.
ADVERTISEMENT RATES India's shorter overnight index swap rates (OIS) barely moved in early deals, while the 5-year rate saw paying pressure due to elevated U.S. Treasury yields.
The one-year was at 5.53% and the two-year OIS rate at 5.50%. The liquid five-year rose 1 basis point to 5.74%. ($1 = 85.9875 Indian rupees).
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