MUMBAI: Indian government bond yields were largely unchanged in early deals on Friday, with the benchmark bond hovering around par levels, as traders await debt supply through the weekly auction and the minutes from the central bank’s latest meeting for cues.
Underlying sentiment remains cautious on elevated US Treasury yields after the Federal Reserve signalled fewer rate cuts in 2025 earlier this week.
The 10-year yield was at 6.7880% as of 9:45 a.m. IST, compared with the previous close of 6.7856%. New Delhi will sell bonds worth 290 billion rupees ($3.41 billion) later in the day through the weekly auction, including a new five-year bond.
“We could see some upside bias as US Treasury yields have extended their upward move, but any major movement is unlikely before the debt auction,” a trader said.
Apart from the debt supply, investor focus will be on the minutes from the Reserve Bank of India’s (RBI’s) December meeting.
The minutes are due after market hours.
India bond yields rise in lead up to domestic inflation data
The RBI held policy rates earlier this month but pumped liquidity into the banking system by lowering banks’ cash reserve ratio.
Meanwhile, pressure from external events persisted as the 10-year Treasury yield rose further on Thursday after strong US data, including growth and weekly jobless claims, supported the Fed’s view of a slower pace of rate cuts in 2025.
The yield hit its highest level in nearly seven months and was at 4.56% in Asia hours.
The Fed cut rates by a widely expected 25 basis points earlier this week, but policymakers now expect only 50 bps of reductions in 2025, according to the updated dot plot, down from 100 bps forecast in September.
Fed Chair Jerome Powell said more reductions in borrowing costs hinge on further progress in lowering stubbornly high inflation.
The odds of a rate cut pause in January stand at 89%, according to CME’s FedWatch Tool.
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