MUMBAI: Indian government bond yields were marginally lower on Friday tracking US peers, while market participants awaited fresh supply through a weekly debt auction.
The 10-year benchmark bond yield was at 7.3481% as of 10:00 a.m. IST after ending at 7.3667% in the previous session.
New Delhi aims to raise 300 billion rupees ($3.60 billion)through the sale of bonds on Friday, which includes a new three-year paper as well as the liquid 14-year bond.
Traders eye strong demand for the three-year note but expect the cutoff yield to be around that for the benchmark three-year note. “There is some positive move (in bond prices) because of US yields,” a trader at a state-run bank said.
“Auction demand as well as cutoffs would be the main driver, especially the result for the new three-year paper.”
US Treasury yields fell on Thursday following the release of weaker-than-expected US inflation and disposable income data, supporting expectation that interest rates are closer to their peak.
A measure of inflation, core personal consumption expenditures, came in weaker than expected, pushing the 10-year US yield to around 4.85%.
Oil prices rose on Friday, with the benchmark Brent contract hovering around the $90-per-barrel mark.
India bond yields decline as oil, US peers ease from their highs
Bond traders await the Indian central bank’s sale of bonds that are aimed at absorbing banking system liquidity.
Banking liquidity has largely stayed in deficit this month, with the gap widening to 1 trillion rupees earlier this week, leading to uncertainty over timing of bond sales.
Market participants had expected central bank’s bond sales to total 500 billion rupees through December.
The Reserve Bank of India is likely to meet senior officials from some banks on Nov. 2 and Nov. 3 to discuss the prevailing banking system liquidity conditions, seven treasury officials told Reuters on Thursday.
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