Bond yields rise as 10-year U.S. yield nears 4%


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MUMBAI — Indian government bond yields were trading higher on Tuesday, tracking the relentless rise in U.S. yields as the 10-year yield inched closer to 4.00%.

The benchmark Indian 10-year government bond yield was at 7.4816% as of 0435 GMT. The yield hit 7.5316% earlier in the day. It ended at 7.4758% on Monday, having risen by an aggregate 12 basis points in the last three sessions.

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“Any move below 7.50% for the benchmark is an opportunity to sell and, till inflation data, we should see very range-bound moves,” a trader with a state-run bank said.

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India’s retail inflation likely accelerated to a five-month high of 7.30% in September, according to a Reuters poll, staying well above the central bank’s tolerance band for a ninth month. The data is due on Wednesday, followed by U.S. inflation data on Thursday.

The yield on the 10-year U.S. Treasury note hit 3.99% earlier in the day, on bets that the Federal Reserve would opt for another 75 basis points hike in early November in its bid to combat inflation, after a strong jobs report.

The Fed has already raised rate by 300 basis points since March to 3.00%-3.25% and markets expect that its more than likely that rates will hit 3.75%-4.00% next month. Chicago Fed President Charles Evans has said he sees the policy rate needing to rise to “a bit above” 4.5% by early next year and stay there.

The marginal dip in oil prices is not helping domestic yields much as traders anticipate the benchmark Brent crude contract to surpass $100 per barrel mark due to supply cuts.

India is one of the largest importers of oil and higher prices of the commodity have a direct impact on its inflation.

Meanwhile, eight Indian states are expected to raise 82.50 billion Indian rupees ($1 billion) through sale of bonds later in the day. ($1 = 82.3975 Indian rupees) (Reporting by Dharamraj Lalit Dhutia; Editing by Savio D’Souza)


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