India bond yields marginally higher, traders await debt supply via auction

Indian government bond yields traded marginally higher in opening deals on Thursday as market participants await a fresh debt supply through the weekly auction. 

The benchmark 10-year bond yield was at 6.8181 per cent as of 9:50 a.m. IST, compared with the previous close of 6.8031 per cent. 

"Ignoring global factors, traders are focused on supply, especially in the liquid part of the curve, and we may not see any major moves until the auction result," a trader with a private bank said. 

India aims to raise Rs 37,000 cr ($4.38 billion) through a sale of bonds later in the day, which includes Rs 13,000 cr of a new 15-year paper. 

Traders may not want to add to long positions ahead of the long weekend as Indian markets are shut on Friday for a local holiday. 

Meanwhile, US consumer prices increased 0.2 per cent for a fourth straight month in October. In the 12 months through October, the consumer price index (CPI) advanced 2.6 per cent after climbing 2.4 per cent in September, according to data on Wednesday. 

This was in line with expectations as economists polled by Reuters had forecast the CPI gaining 0.2 per cent and increasing 2.6 per cent year-on-year. 

The odds of a US rate cut next month have risen, with shorter duration US yields, which are more reactive to rate cuts, seen coming down more. 

Investors now see an 83 per cent chance of a December rate cut, up from 59 per cent a day ago, and 70 per cent a week ago, according to the CME FedWatch tool. 

This is in contrast to India, where consumer price inflation accelerated to 6.21 per cent in October, breaching the central bank's target range for the first time in 14 months and dashing hopes for a rate reduction next month. 

The Reserve Bank of India aims to keep inflation in a range of 2 per cent-6 per cent, with a medium-term goal of 4 per cent. 

 

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