India bond yields seen lower tracking U.S., index inclusion bets aid

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MUMBAI — Indian government bond yields are likely to ease in early trades on Monday, tracking a similar move in U.S. Treasury yields, while sentiment remains bullish on bets of inclusion of local debt in global indexes.

The benchmark 10-year Indian government bond yield is likely to trade in the 7.20%-7.26% band, a trader with a private bank said. The yield has risen four basis points in last two sessions to end at 7.2318%.

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“U.S. Treasury yields have fallen after their jobs data, and bets of aggressive rate hike has also come down, so local bonds should see some buying bias,” the trader said.

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The U.S. Treasury yields fell, with the 10-year yield easing below 7.20% on Monday after a closely watched employment report showed unemployment rising and job growth slowing in August, as many on Wall Street had expected.

Underlying sentiment remains strong as investors expect some progress in terms of Indian bonds being included in global indexes which could spur inflows, led by a sustained purchase of papers by foreign banks, traders said.

India wants global bond index operators to consider local settlement of its government securities if they are included in their indexes, a government official said last week.

Bond bulls got a boost after the Financial Times reported last month that JPMorgan was speaking to large investors about adding India to its emerging markets bond index. Goldman Sachs had previously said it expects an inclusion in 2023, estimating inflows of $30 billion. KEY INDICATORS: ** Brent crude futures up 1.9% at $94.80 per barrel ** Ten-year U.S. bond yield at 3.1910% ($1 = 79.7170 Indian rupees) (Reporting by Dharamraj Lalit Dhutia; Editing by Dhanya Ann Thoppil)

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