India bond yields seen easing tracking US peers, quarter-end demand to aid

Back home, demand is expected to remain strong on the last day of the fiscal second quarter, and after state-run banks turned large buyers in the previous week

2 min read Last Updated : Sep 30 2024 | 9:57 AM IST

Indian government bonds are likely to recover marginally on Monday, and yields may dip in opening trades tracking a similar move in US yields, after inflation did not surprise negatively, while bond demand at quarter-end will also support.

The benchmark 10-year yield is likely to move between 6.73 per cent and 6.77 per cent on Monday, compared with its previous close of 6.7609 per cent, trader with a primary dealership said.

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"There is a window of opportunity to get in, and the way state-run banks have bought last week, we would definitely see the benchmark bond yield easing below 6.75 per cent handle today, and stay there for the week," the trader said.

US yields fell on Friday after data showed inflation in the world's largest economy continued to ease, boosting the chances of yet another larger interest rate cut at the Federal Reserve's November policy meeting.

The personal consumption expenditures (PCE) price index, the Fed's favoured inflation measure, rose 0.1 per cent in August in line with estimates, against 0.2 per cent gain in July. In the 12 months through August, the reading rose 2.2 per cent after rising 2.5 per cent in July.

Excluding the volatile food and energy components, the so-called core PCE price index increased 0.1 per cent after an unrevised 0.2 per cent rise in July. In the 12 months through August, core inflation advanced 2.7 per cent after climbing 2.6 per cent in July.

The interest rate futures market has assigned a probability of another 53 per cent for a 50-basis-point rate cut, sharply higher from 10 per cent a month ago.

Back home, demand is expected to remain strong on the last day of the fiscal second quarter, and after state-run banks turned large buyers in the previous week.

India will sell bonds worth 6.61 trillion rupees ($78.97 billion) from October through March, which is in line with budget estimates. This had led to steepening in the yield curve on Friday, even as the Reserve Bank of India continued bond sales.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sep 30 2024 | 9:57 AMIST