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Mint
5 days ago
- Business
- Mint
India long duration bonds rise on bets of dovish RBI policy
MUMBAI, June 5 (Reuters) - Indian government bonds rose in early deals on Thursday, led by longer-duration papers, as traders added positions a day before the central bank is widely expected to deliver a policy rate cut. The yield on the benchmark 10-year bond was at 6.1966% as of 10:00 a.m. IST, compared with the previous close of 6.2065%. The five-year 6.75% 2029 bond yield was at 5.8461% after ending at 5.8514%. Bond yields move inversely to prices. "Bond prices could rally if there is something more apart from a rate cut, which is leading to some long build-up. Also, Treasury yields have come down and that is having a sentimental impact," a trader with a primary dealership says. The Reserve Bank of India's policy decision is due on Friday when it is widely expected to cut interest rates by 25 basis points for a third consecutive time this year. Muted inflation provides ample space to focus on boosting economic growth further, traders said. The RBI has lowered rates by 50 bps in 2025 and has infused $100 billion into the banking system in the December-May period. While most expect a 25-bp cut, the State Bank of India said the RBI should slash rates by 50 bps to jumpstart the credit cycle. DBS is expecting a 25-bp cut on Friday, followed by another similar cut in July-December. Some traders expect the RBI to undertake more liquidity-boosting measures, which will further support short-end bond prices. There was not much activity in the overnight index swap (OIS) market. The one-year OIS rate and two-year OIS rate were not yet traded after ending at 5.54%, and 5.43% respectively. However, the most liquid five-year OIS was seeing some receiving interest and was down to 5.62%, in the key technical support zone. (Reporting by Dharamraj Dhutia Editing by Eileen Soreng)
Mint
20-05-2025
- Business
- Mint
Indian bond yields seen moving with an upside bias
MUMBAI, May 20 (Reuters) - Indian government bond yields are expected to open with a marginal upside bias on Tuesday, a day after the central bank bought lesser than scheduled quantum of bonds, triggering some selling pressure. The yield on the new benchmark bond maturing in 2035 is expected to move between 6.22% and 6.26%, a trader with a private bank said, compared with the previous close of 6.2382%. The 2034 bond yield ended at 6.2904%. On Monday, the Reserve Bank of India bought bonds worth 192.03 billion rupees ($2.25 billion), less than 80% of its targeted 250 billion rupees. This was also the last scheduled open market bond purchase as per the central bank's calendar. "There was some reaction to the fact that the RBI chose not to go for the full quantum, as they may have wanted to avoid yield signal, which led to a selloff," the trader said. The RBI had bought bonds worth 1 trillion rupees in the last two weeks, which followed 3.65 trillion rupees of purchases in the first four months of 2025. It had also bought bonds worth 388 billion rupees through the secondary market in January. Traders will now focus on the quantum of RBI's dividend payment to the government, which is expected to be announced soon. Economists expect the central bank to transfer a record surplus this year, with Citi estimating it in the range of 3.5-4 trillion rupees, sharply higher than 2.1 trillion rupees in the previous year. India's overnight index swap (OIS) rates rose marginally on Monday and are expected to remain in a narrow range on Tuesday. The one-year OIS rate was at 5.63%, the two-year OIS rate was at 5.53%, while the most liquid five-year OIS rate ended five bps higher at 5.71%. KEY INDICATORS: ** Brent crude futures were 0.1% higher at $65.60 per barrel, after rising 0.2% in previous session ** Ten-year U.S. Treasury yield at 4.4493%; two-year yield at 3.9765% ** Indian states aim to raise 148 billion rupees through bond sale ** RBI to conduct one-day variable rate repo auction for 250 billion rupees ($1 = 85.4080 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Eileen Soreng)
Mint
29-04-2025
- Business
- Mint
Indian bond yields slide as RBIs bond buy plan aids sentiment
MUMBAI, April 29 (Reuters) - Indian government bond yields plunged in early deals on Tuesday, as market participants were taken by surprise by the central bank's larger-than-expected bond-buying plan for next month. The benchmark 10-year bond yield was at 6.3537% as of 10:15 a.m. IST, compared with its previous close of 6.3959%. "As expected, we had a gap down opening for yields, with the benchmark bond yield hitting 6.32%, but some consolidation is expected around current levels before the next leg of rally begins," a trader with a private bank said. The Reserve Bank of India said after market hours on Monday that it will buy bonds worth 1.25 trillion rupees ($14.70 billion) in four tranches in the first three weeks of May. The announcement propped up sentiment. The yield on the 10-year bond hit a near two-week high of 6.4029% on Monday, amid fears that the RBI will pause its bond purchases ahead of its dividend announcement, which generally happens by the end of May. Investors now expect the benchmark bond yield to test 6.30% levels in the coming days, given that there are no major negative triggers. Further boosting sentiment is New Delhi's upcoming issuance of the new 10-year bond on Friday, which will replace the existing benchmark paper. India's banking system liquidity surplus is currently a tad below 1 trillion rupees. Later in the day, the RBI will buy bonds worth 200 billion rupees, taking the quantum of its purchases to 1.20 trillion rupees for April. India's overnight index swap (OIS) rates declined due to a strong receiving bias after the RBI announced the fresh liquidity injection plan, which will aid the transmission of further rate cuts. A further decline in U.S. yields will also favour receiving. The one-year OIS rate dropped 6 basis points to 5.66%, while the two-year OIS rate fell 6 basis points to 5.51% and the five-year OIS rate was 6 basis points lower at 5.64%. ($1 = 85.0530 Indian rupees) (Reporting by Khushi Malhotra Editing by Eileen Soreng) First Published: 29 Apr 2025, 10:20 AM IST
Mint
23-04-2025
- Business
- Mint
India bond yields seen steady ahead of central bank minutes
MUMBAI, April 23 (Reuters) - Indian government bond yields are expected to be little changed in early deals on Wednesday, as market participants await the minutes of the central bank's latest meeting, while underlying sentiment remains favourable for the bulls. The benchmark 10-year bond yield is likely to move between 6.30% and 6.34%, a trader at a private bank said, compared with its previous close of 6.3201%. "The benchmark bond recovered all its losses yesterday before the end of the session and this goes to show the underlying strength in the market and the heavy bullish bias for debt," the trader said. The benchmark bond yield ended nearly unchanged on Monday, after staying higher for most of the session, tracking U.S. yields and some concerns over demand after the Reserve Bank of India's final guidelines on liquidity management. The RBI said banks will set a buffer rate of 2.5% on digitally accessible retail deposits - half the level announced in July. This could potentially impact the demand for government securities from lenders. The minutes of the April monetary policy meeting are due after market hours. The RBI had cut the repo rate by 25 basis points for the second consecutive time and also changed policy stance to accommodative from neutral. Traders will look for cues on the depth of the current easing cycle, with most now expecting a third consecutive rate cut in June. The sentiment was also upbeat amid continuous open market bond purchases from the RBI, which has already bought notes worth 1 trillion rupees ($11.73 billion) so far in April and is scheduled to buy bonds worth 200 billion rupees next week. India's overnight index swap rates are expected to be rangebound after inching higher on Tuesday. The one-year OIS rate posted its first uptick after declining for 14 straight sessions. The two-year and five-year OIS rates have declined around 31 and 27 bps, respectively, so far in April. KEY INDICATORS: ** Brent crude futures were up 0.7% at $67.95 per barrel, after rising 1.8% in the previous session ** Ten-year U.S. Treasury yield at 4.3481%; two-year yield at 3.8216% ** RBI to auction treasury bills worth 190 billion rupees ** RBI to conduct 1-day variable rate repo auction for 1 trillion rupees ** RBI to detail minutes of latest policy meeting ($1 = 85.2370 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Eileen Soreng) First Published: 23 Apr 2025, 08:22 AM IST
Mint
22-04-2025
- Business
- Mint
India bond yields may rise after central bank revises liquidity norms
MUMBAI, April 22 (Reuters) - Indian government bond yields are expected to edge higher in early deals on Tuesday, tracking U.S. yields and as demand for bonds could ease following the central bank's revised liquidity norms. The benchmark 10-year bond yield is likely to move between 6.32% and 6.36%, a trader at a private bank said, compared with its previous close of 6.3164%, its lowest since November 9, 2021. "As an immediate fallout, we should see some negative reaction from the revised guidelines, as theoretically it is seen reducing demand for bonds," the trader said. "However, the underlying sentiment continues to be supportive of bulls, and that should put a lid on any large upside to yields." The Reserve Bank of India said on Monday it will direct lenders to assign a lower-than-proposed buffer rate of 2.5% on digitally linked deposits, with a one-year compliance deadline. In July, the RBI proposed that banks set aside an additional 5% 'run-off factor' on digitally accessible retail deposits to better manage risks in case of quick and heavy withdrawals via internet or mobile banking. Traders said that if the run-off factors had not been reduced, there would have been a rush to buy government securities to meet these guidelines. The focus was also on the central bank's debt purchase as it will buy bonds worth 200 billion rupees ($2.35 billion) on Tuesday, its fourth such auction this month. It has already bought bonds worth 800 billion rupees in April and is scheduled to buy 200 billion rupees of debt next week. In January-March, it bought bonds worth 2.45 trillion rupees through OMOs and another 388.25 billion rupees through secondary market debt purchases. India's overnight index swap rates are expected to move slightly higher as the 10-year U.S. Treasury yield rises to 4.40%, traders said. The one-year OIS rate two-year and five-year OIS rates have declined around 30 basis points so far in April. KEY INDICATORS: ** Brent crude futures were up 0.6% at $66.65 per barrel, after easing 2.5% in the previous session ** Ten-year U.S. Treasury yield at 4.4106%; two-year yield at 3.7791% ** Indian states aim to raise 108.70 billion rupees through bond sale ** RBI to conduct 1-day variable rate repo auction for 1.25 trillion rupees ($1 = 85.2140 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Eileen Soreng) First Published: 22 Apr 2025, 08:30 AM IST
