Bond yields seen marginally higher tracking U.S. peers
MUMBAI — Indian government bond yields are expected to open marginally higher in early trading on Tuesday, as the 10-year U.S. yield inches closer to 4.00%.
The benchmark Indian 10-year government bond yield is seen in a 7.46%-7.50% band, a trader with a private bank said. The yield, which ended at 7.4758% on Monday and has risen an aggregate 12 basis points in the last three sessions.
“We should see some selling today, tracking U.S. yields, but any major move could be safely ruled out until the inflation data,” the trader said. “Also, some pullback in oil prices could help.”
The yield on 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 U.S. Federal Reserve has already raised interest rate by 300 basis points since March and is scheduled to meet in November and December.
Meanwhile, oil prices dipped on Monday, as a stronger U.S. dollar and a rise in COVID-19 cases in China increased fears of slowing global demand.
Still, the benchmark Brent crude contract threatens to surpass $100 per barrel mark after Organization of Petroleum Exporting Countries and allies, together known as OPEC+, agreed to make its largest supply cut since 2020.
India is one of the largest importers of oil and higher prices of the commodity have a direct impact on its inflation.
India’s retail inflation accelerated to a five-month high of 7.30% in September due to surging food prices, staying well above the Reserve Bank of India’s tolerance band for a ninth month, a Reuters poll found. The data is due on Wednesday. This would be followed by U.S. inflation data on Thursday. KEY INDICATORS: ** Brent crude futures was little changed at $96.25 per barrel, after easing 1.8% on Monday ** 10-year U.S. Treasury yield was at 3.9836% and the two-year note at 4.3329%
** Eight Indian states to raise 82.50 billion Indian rupees ($1.00 billion) through sale of bonds ($1 = 82.3970 Indian rupees) (Reporting by Dharamraj Lalit Dhutia; Editing by Dhanya Ann Thoppil)
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