2 days Ago
By Dharamraj Dhutia MUMBAI, Jan 2 (Reuters) - Indian government bond yields are likely to be little changed in early deals on Thursday, as traders await fresh supply a day later. The 10-year bond yield is likely to move between 6.76% and 6.
79%, a trader with a private bank said, compared with its previous close of 6.7813%. Yields rose on Wednesday, the first trading session of 2025, after states announced a record debt supply for January-March.
New Delhi will sell bonds worth 320 billion rupees ($3.74 billion) on Friday, and this auction includes 220 billion rupees of the benchmark paper. Indian states aim to borrow a record 4.
73 trillion rupees through the sale of bonds in the three months to March-end, against market estimates of about 4 trillion rupees. "The benchmark bond yield could move to par levels, but any major rise in the yield beyond 6.79%-6.
80% seems unlikely for today," the trader said. "Tomorrow's supply would be crucial to judge investor appetite in the final quarter of the financial year." India's financial year runs April through March.
Bond yields declined in 2024, with the 10-year yield slipping 42 basis points, its biggest fall in four years, as the government's fiscal discipline and inclusion of debt in global indexes boosted demand. Investors now await the start of the domestic rate easing cycle from as early as next month, and the direction of foreign flows, which hit a record high in 2024. Market participants will also track U.
S. Treasury yields, especially in the wake of Donald Trump taking charge as U.S.
president later this month. The 10-year U.S.
bond yield posted its fourth consecutive yearly rise in 2024, rising 72 basis points. The Federal Reserve has lowered its rate cut forecast for 2025 to 50 basis points from 100 bps earlier, and the odds of a Fed pause in January are at 89%, according to CME's FedWatch Tool. KEY INDICATORS: ** Brent crude futures were 0.
5% higher at $75.05 per barrel, after rising 0.3% in the previous session ** Ten-year U.
S. Treasury yield ended at 4.5770%; two-year yield ended at 4.
2520% on Tuesday ($1 = 85.6480 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Mrigank Dhaniwala).
