 "Indian govt bond yields likely to inch further up mirroring US peers")
Indian government bond yields are expected to track the rising trend in US Treasury yields in the early trading on Thursday, even as the market eyes response to the fourth buyback of government securities this month.
India's benchmark 10-year yield is likely to move in a 7.00 per cent -7.04 per cent range, following its previous close of 7.0129 per cent, a trader with a state-run bank said.
"Within a span of two weeks the 10-year US yield has jumped 30 basis points, and even though domestic fundamentals are strong and supportive, bonds should give in to some selling pressure today," the trader added.
US yields rose further as weak demand for fresh auctions continued, while commentary from Minneapolis Federal Reserve Bank President Neel Kashkari prompted a further reduction in bets of rate cuts in the world's largest economy.
Kashkari in an interview said that the Fed should wait for significant progress on inflation before cutting interest rates, and he would need "many more months of positive inflation data" for confidence to turn towards easing.
Bets of a rate cut in September has eased to 47 per cent , down from 58 per cent in the previous week, while the futures market is pricing only around 31 basis points (bps) of rate cuts this year, compared with over 50 bps earlier in the month, according to CME FedWatch Tool.
Back home, the central government aims to buyback bonds worth Rs 40,000 crore ($4.80 billion) maturing within this financial year, in what would be its fourth such attempt in as many weeks.
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It has already bought back securities worth around Rs 17,900 crore so far, and reduced the supply of Treasury bills by Rs 60,000 crore till the end of June, as it sits on surplus cash.
The broader sentiment was also upbeat after the central bank's record surplus transfer bolstered the government's fiscal position, leading to speculations of a further cut in debt supply sometime during the year.
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