India bond yields dip as investors eye second-half borrowing calendar

Indian government bond yields ended marginally lower on Tuesday as expectations of a tweak in the government's borrowing plan for the rest of the year offset the impact of elevated U.S. Treasury yields and oil prices.

The 10-year benchmark 7.18% 2033 bond yield ended at 7.1441% after closing at 7.1541% in the previous session.
 

"There may not be any significant cut in the planned second-half borrowing," said Debendra Kumar Dash, senior vice-president, treasury, AU Small Finance Bank.
 

"Elevated oil prices and U.S. yields will continue to keep local bonds under pressure, with 7.25% acting as a strong upside."

India aims to borrow 6.55 trillion rupees ($78.68 billion) on a gross basis through the sale of bonds in October-March, and officials of India's federal government and the central bank are meeting in New Delhi on Tuesday to finalise the borrowing plan for October to March, two sources told Reuters.
 

Market participants are speculating some tweaks in the second-half borrowing plan, with either a reduction in issuance or a change in the issuance pattern.
 

A few weeks ago, market participants had suggested that the government increase issuance of 30-year and 40-year bonds, while reducing supply from other maturities.
 

U.S. yields continue to remain elevated with the benchmark 10-year yield logging a fresh 16-year high on bets of higher-for-longer interest rates.
 

Chicago Fed President Austan Goolsbee said inflation staying entrenched above the central bank's 2% target remains a bigger risk than a tight Fed policy slowing the economy more than needed.
 

High U.S. yields and crude oil prices have dented investors' appetite, leading to a sharp reversal in the rally post JPMorgan's inclusion of India's sovereign bonds in its emerging market debt index.
 

The benchmark Brent crude contract continues to hover around $93 per barrel.