Indian government bond yields remain steady as traders focus on new triggers

2 minutes of reading Latest version: April 25, 2024 | 10:32 am IST

Indian government bond yields are expected to trade sideways as traders and investors await the release of key data on domestic debt supply and US inflation on Thursday.

A trader at a major dealer said the benchmark 10-year Treasury yield could trade between 7.16% and 7.20% after closing at 7.1852%.

“Yesterday we saw some upside in bond yields as oil and Treasury yields bear upside risk, but today we see small business becoming the theme,” the trader said.

Bond yields fell in the first two days of the week, recovering some of those losses on Wednesday as oil prices and U.S. yields held near levels that could lead to further gains.

Oil prices were lower on the prospect of delaying interest rate cuts on worries about a possible slowdown in the US economy, outweighing worries about the risk of a wider conflict in the Middle East.

However, the benchmark Brent crude oil contract continued to trade near $87 per barrel. Higher crude oil prices may affect retail inflation in India as the country is one of the largest importers of the commodity.

US Treasury yields were higher, with the 10-year yield around 4.65%, as traders awaited key economic data on Thursday and Friday for further clues on Federal Reserve policy.

The data will be released after expected inflation data in March cut expectations for a rate cut.

According to CME’s FedWatch tool, investors are currently pricing in the possibility that the Federal Reserve will cut interest rates by about 42 basis points (bps) before the end of the year.

Initial release: April 25, 2024 | 10:30 am IST