MUMBAI: Indian government bond yields were trading marginally higher, after opening flattish in the early session on Wednesday, tracking an uptick in US peers, while traders await the April-September borrowing calendar.
The 10-year benchmark 7.26% 2032 bond yield was at 7.3345% as of 9:45 a.m. IST, after closing at 7.3240% on Tuesday. The market is closed on Thursday.
“There is some reaction to US yields, but (domestic) yields should move in a narrow range till the borrowing calendar is out, which most likely should be Friday evening,” a trader with a primary dealership said. Overnight, US yields rose further on optimism that the recent stress in the banking system will be contained.
The two-year yield was trading above 4.10%, while the 10-year yield was trading close to 3.60%.
Bond yields rose slightly after states raised a record 412.14 billion rupees ($5.02 billion) on Tuesday, ahead of the new financial year, which is expected to bring the focus back on the demand-supply mismatch.
Traders now await the central government’s borrowing calendar for the first half of the next fiscal year. It is expected to borrow between 55% and 58% of its gross annual target of 15.43 trillion rupees.
New Delhi will raise 390 billion rupees through the sale of Treasury bills later in the day.
Indian bond yields little changed as retail inflation dents mood
Traders anticipate borrowing via the ultra-short-term papers to remain elevated in April-June.
The Reserve Bank of India’s monetary policy decision is due next week, on April 6.
The central bank will raise interest rates by 25 basis points and then pause for the rest of the year, according to a Reuters poll of economists, who said the RBI will maintain its tightening stance.
A strong majority of economists, 49 of 62, said the RBI would lift its repo rate to a seven-year high of 6.75%. It has raised rates by 250 bps to 6.50% this financial year.
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