India govt bond yields seen a tad lower as US peers sink; debt sale eyed

Indian government bond yields are expected to trend lower in early trades on Friday, tracking a further slump in U.S. Treasury yields, but the fall may remain capped before fresh debt supply via the weekly auction.

The benchmark 10-year yield is likely to move in the 6.89%-6.93% range, compared with its previous close of 6.9166%, a trader with a private bank said.
 

"We could see some buying pressure at the open, which could once again lead the benchmark bond yield to touch 6.90%, but it may again hold around those levels and any major break is unlikely. The focus would also be on supply," the trader said.
 

U.S. Treasury yields sank on Thursday, with the 10-year yields hitting a fresh six-month low in Asian hours on Friday, amid building worries over the U.S. economy as a surprise slump in manufacturing data ignited worries the Federal Reserve may be behind the curve with rate cuts.
 

Earlier this week, Fed Chair Jerome Powell said price pressures were broadly easing and that a "rate cut could be on the table" at the September meeting.
 

Investors have now priced in about 85 basis points of rate cuts in 2024, with a 32% probability of the first cut in September being a 50 bps move, per the CME FedWatch tool.
 

New Delhi aims to raise 220 billion rupees ($2.63 billion) through the sale of bonds, including green bonds and a 30-year paper. Earlier this financial year, a green bond sale had to be cancelled as investors had bid at higher yields.
 

This is the first auction since the central bank reintroduced investment curbs on the 14- and 30-year papers.
 

That decision that has not gone down well with foreign investors, who call it a policy flip-flop that may force them to redraw investment strategies.
 

Key Indicators:

** Brent crude futures were higher by 0.4% at $79.80 per barrel, after easing 1.5% in the previous session
** Ten-year U.S. Treasury yield at 3.9493%, two-year yield at 4.1276%

** India to sell sovereign bonds worth 220 billion rupees
** RBI to set underwriting fees for 220 billion rupees of sovereign bond auction

** RBI to conduct 7-day variable rate reverse repo auction for 1.50 trillion rupees

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)