MUMBAI: Indian government bond yields were trading largely unchanged on the last day of the month, as traders awaited fresh triggers including local growth data which is due after market hours.
The benchmark bond yield however was set to post its biggest fall in six months in November.
India’s 10-year benchmark bond yield was at 7.2526% as of 10:00 a.m. on Thursday, after ending the previous session at 7.2511%.
“At 7.25% for the benchmark, there is caution on both sides, and hence traders will wait for a breakout before taking active positions,” a trader with a state-run bank said.
India’s economic expansion likely moderated but remained strong in the September quarter, supported by robust service activity and solid urban demand despite a global slowdown dampening export growth, according to a Reuters poll.
Gross domestic product (GDP) growth is forecast to have slowed to 6.8% in July-September from 7.8% in the previous quarter, but forecasters see that as a minor slowdown from an exceptionally strong quarter for Asia’s third-largest economy, which is expected by the same group of economists to grow more than 6.0% over coming years.
Underlying sentiment has improved after a sharp decline in US Treasury yields, which have been easing on bets that Federal Reserve will start cutting rates in the first half of 2024.
Indian bond yields fall as US Treasury yields decline further
The 10-year US yield was trading around 4.25% handle, down by over 75 basis points in the last six weeks.
The move got a boost from dovish commentary by a Fed official that has pushed the probability of a rate cut in March to above 50%.
Bond traders also awaited a decision regarding the inclusion of Indian bonds in the Bloomberg Global Aggregate index after JPMorgan added the notes to its emerging market index in September.
Traders also eyed fresh supply of debt. New Delhi will sell 300 billion rupees ($3.60 billion) of bonds on Friday, which includes 130 billion rupees of the benchmark paper.
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