India bond yields end little changed before RBI policy minutes
yields were off their lows to end little changed on Thursday as the impact from a fall in U.S. yields was offset by caution before the release of the Reserve Bank of India's policy minutes as well as debt supply.
The benchmark 7.26% 2033 bond yield ended at 7.1963% after ending the previous session at 7.1927%.
Earlier in the day, it fell to 7.1721%, the lowest since Aug. 10.
«Local bonds have been tracking U.S.
yields, but they have not fallen much as inflation worries continue to hurt,» said Rajeev Pawar, head of treasury at Ujjivan Small Finance Bank.
«I do not expect any major surprise from the minutes, but commentary from the Federal Reserve could see yields rising again.»
RBI minutes could provide insight into the central bank's thoughts on inflation trajectory. It had maintained a status quo on policy rates but raised inflation forecast.
Retail inflation surged to 7.44% in July, the highest in 15 months.
Vegetable prices have begun to soften and are likely to decline from September, RBI Governor Shaktikanta Das said on Wednesday.
Meanwhile, New Delhi will raise 330 billion rupees ($4.00 billion) through the sale of bonds on Friday.
The auction includes 140 billion rupees of the 7.18% 2033 bond, which will replace the existing benchmark bond.
Earlier in the day, yields fell tracking a slump in U.S. yields as weak U.S.
and European activity signalled disinflation.
The 10-year yield eased below the crucial 4.20% mark after hitting 4.3660% earlier in the week, the highest since November 2007.
Fed funds futures traders are pricing in over 100 basis points (bps) of rate cuts by end-2024, down from around 140 bps from a few weeks earlier, but up from the below-100 bps expectations earlier in the week. ($1 = 82.5524 Indian
