MUMBAI: Indian government bond yields are expected to trend largely unchanged on Thursday, ahead of key market-moving events and a long holiday weekend.
The benchmark 10-year bond yield is likely to move between 6.80% and 6.84%, compared with the previous close of 6.8271%, a trader with a private bank said.
Indian debt markets will be closed on Friday for a holiday.
“Most (investors) have already positioned themselves for the major data points and events that will be coming up over the next few days, and with thinly staffed trading desks due to festival holidays, volume is expected to remain shallow,” the trader said.
In the absence of a weekly central government debt auction, some investors may continue value purchases.
So, any large upward move is unlikely in yields, traders said.
The 10-year US yield was comfortably above 4.25% in Asian hours, and traders now await the personal consumption expenditure data due after Indian market hours on Thursday and the October non-farm payrolls report on Friday for further direction.
These data points are likely to be key factors in the Federal Reserve’s monetary policy decision due next Thursday.
Interest rate futures continue to indicate a 94% probability that the Fed will cut rates by 25 basis points next week.
India bond yields seen little changed before state debt sale
Traders are expecting only two rate cuts of 25 bps each in the next three meetings from December to March, against three cuts a month back.
The US presidential election is next Tuesday and betting markets show Republican candidate and former President Donald Trump as the favourite to gain the majority.
Trump’s policies on enacting higher tariffs on imports are likely to stoke inflation and put upward pressure on US Treasury yields.
A Trump win would likely see sharp falls in some Asian currencies, while Asia rates have largely priced in higher US rates, Mitul Kotecha, an emerging market strategist at Barclays, said in a note.
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