MUMBAI: Indian government bond yields rose on Friday ahead of fresh debt supply, with the benchmark yield going above a key technical level on the last day of the quarter, while elevated U.S yields continued to weigh on investor sentiment.
The benchmark 7.26% 2033 bond yield was at 7.0877% as of 10:00 a.m. IST, after closing at 7.0575% in the previous session.
The yield is set to post its first monthly rise since February, amid hawkish commentaries from central banks. Cutoffs are expected to rise as sentiment has further worsened, a trader with a private bank said.
“A close above 7.08% will see market in bearish grip in the next quarter.”
New Delhi will raise 330 billion rupees ($4.02 billion) through the sale of bonds later in the day and the auction includes 140 billion rupees of the benchmark note.
Market participants also await supply calendar for state debt as well as treasury bills for July-September, which is likely to out by end of Friday.
Meanwhile, US yields jumped on Thursday after upbeat data solidified the picture of an economy and job market defying predictions of a recession, underpinning pronouncements from the Federal Reserve chief that there is little room to let up on monetary tightening.
Indian benchmark yields stuck near key level, await fresh cues
US weekly claims for unemployment insurance came in at 239,000, below the 265,000 expected and below last week’s revised 265,000 jobless claims filed.
At the same time, the final print for first-quarter gross domestic product growth was 2.0%, higher than last month’s 1.3% reading and the 1.4% forecast by economists polled by Reuters.
The 10-year yield rose above the crucial 3.85% mark, while the two-year yield, a closer indicator of interest rate expectations, jumped 16 basis points to 4.88% as bets of interest rate hikes from the Fed rose.
The odds of a rate hike in July stand surged to around 84% from 74% earlier in the week.
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