India bond yields edge lower tracking US peers
debt after domestic securities were included in a global index.
The benchmark 10-year yield ended at 6.9987%, following its previous close of 7.0112%.
The 10-year bond yield slipped modestly ahead of the inclusion, but profit-taking interests drove yields back above 7% by end trade, Radhika Rao, executive director and senior economist at DBS Bank, said in a note.
Investors continue to gauge the pace of foreign inflows into Indian government bonds over the next few days after an underwhelming response so far, since the inclusion of local debt in the JPMorgan index on June 28.
Foreign investors have bought bonds under the Fully Accessible Route, which are now a part of the index, worth only 37.7 billion rupees ($451.42 million) on a net basis in first three days of the index inclusion.
«With a resumption in government spending post elections, improving liquidity balance might re-introduce a steepening bias in the rupee yield curve, contingent on global UST (U.S. Treasury) cues,» Rao said.
The 10-year U.S. yield eased to 4.44% on Tuesday after job openings, a measure of labour demand, rose 221,000 to 8.140 million on the last day of May, the lowest level since February 2021.
Federal Reserve Chair Jerome Powell said the central bank still needed more data before cutting interest rates to ensure that recent weaker inflation readings give a true picture of underlying price pressures.
Investors continue to anticipate 46 basis points of rate cuts from the Federal Reserve in 2024, with first action in September,
