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India bond yields inch lower after Fed rate cut pulls down US Treasury

The Fed cut interest rate by 25 basis points on Thursday, as widely expected, amid a cooling labour market, while noting that economic growth remained solid

Bonds

The benchmark 10-year yield was at 6.7825 per cent as of 09:45 a.m. IST

Reuters Mumbai

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Indian government bond yields dipped in early trading on Friday, tracking US yields after the Federal Reserve eased interest rates as expected and did not sound hawkish. 
The benchmark 10-year yield was at 6.7825 per cent as of 09:45 a.m. IST, compared with Thursday's close of 6.7931 per cent. 
There is a bit of respite as fears were overblown that Fed will change its language and factor in some hawkishness, but that has not transpired, a trader with a primary dealership said. 
"Even supply is not very high, so there is no stress from that angle as well," the trader said. 
 
New Delhi will raise Rs 22,000 crore ($2.61 billion)through sale of bonds, which includes three-year and 40-year bonds.
"No supply in either 10-year or 15-year bucket today will also help," the trader said. 
The Fed cut interest rate by 25 basis points on Thursday, as widely expected, amid a cooling labour market, while noting that economic growth remained solid. 
U.S. yields declined following the cut, with the 10-year yield moving below 4.35 per cent after Fed Chair Jerome Powell said the election outcome had no near-term policy impact. The yield was last at 4.33 per cent in Asia hours. 
Analysts expect president-elect Donald Trump's policies, are likely to stoke inflation, and could put upward pressure on yields, slowing down the pace of rate cuts. 
Barclays anticipates the Fed to cut rate by 25 bps in December, but follow it with only two rate cuts of 25 bps each in 2025.
Interest rate futures now expect a 75 per cent probability that the Fed will cut rates by 25 bps in December, from 70 per cent before the decision, and an additional 25 bps of cuts for the next quarter.
 

(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.)

(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.)

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First Published: Nov 08 2024 | 12:02 PM IST

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