India bond yields set to post third straight monthly fall in May
government bond yields
are set for a third consecutive monthly decline in May, amid the central bank's continuous
liquidity injection
and bets of further
monetary policy easing
in coming months.
The yields were little changed on Friday, with focus on fresh debt supply through a weekly auction followed by the country's latest growth data.
The yield on the new benchmark 10-year bond was at 6.1806% as of 10:00 a.m. IST, compared with the previous close of 6.1794%. The paper was issued at 6.33% on May 2 and jumped to 6.40% in the following week.
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India bond yields set to post third straight monthly fall in May
Indian government bond yields are decreasing in May. This marks the third consecutive monthly decline. The Reserve Bank of India is injecting liquidity. Expectations are for further monetary policy easing. New Delhi will sell benchmark bonds. This will increase liquidity. Economists estimate India's growth data for January-March. The Reserve Bank of India is expected to cut rates on June 6.
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The most liquid and former benchmark 2034 bond yield was at 6.2491% after settling at 6.2518%. It had hit a high of 6.44% during the month.
The
10-year bond yield
fell by 14 bps and 22 bps in March and April, respectively.
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New Delhi will sell
benchmark bonds
worth 300 billion rupees ($3.52 billion), which will double its outstanding amount and make it more liquid.
"Auction demand and growth data will be key driver for the direction of yields till the central bank's policy next week," a trader with a mutual fund said.
India's economic growth data for January-March is due on Friday, with economists estimating growth of 6.7%, versus 6.2% in the prior quarter.
The
Reserve Bank of India
is widely expected to deliver a third straight 25-basis-point rate cut on June 6. Traders anticipate bond yields to decline further.
The RBI has cut rates by 50 bps in 2025 and has infused around $100 billion into the banking system since December.
RATES
Overnight index swap (OIS) rates eased marginally. The one-year OIS was down 3 bps at 5.54%, while the two-year OIS rate was also down 3 bps at 5.463%. The most liquid five-year dipped 2 bps to 5.62%. ($1 = 85.2920 Indian rupees)
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