 "bonds market, currencies, currency, RBI, yield")
Indian government bond yields were largely flat on Wednesday in yet another trading session, amid consolidation after their recent decline and as traders awaited more directional triggers.
The 10-year benchmark bond yield ended at 7.1679% after closing at 7.1744% in the previous session.
"The Fed trigger has already played out in terms of reaction in bonds and market is now looking for some fresh triggers, with the 7.15% level remaining very crucial for the benchmark to break on the downside," said Gopal Tripathi, head of treasury and capital markets at Jana Small Finance Bank.
Domestic bond yields have fallen in the last few days, tracking a plunge in U.S. Treasury yields on bets of a policy pivot from the Federal Reserve.
The 10-year U.S. yield remained below 3.90% in Asian hours on rising expectations of interest rate cuts after the Fed's dovish commentary projected three cuts in 2024.
Markets now see a 76% probability of rate cuts in March and more than a 97% chance in May. Even though the dot plot shows 75 basis points (bps) of cuts in 2024, markets are pricing-in 125 bps of rate action from the Fed.
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Market sentiment is also supported as foreign investors continue to buy domestic debt. They net bought more than Rs 250 billion ($3.01 billion) of bonds in the November-December period, according to data.
Markets now await the minutes of the Reserve Bank of India's (RBI) latest policy decision, scheduled for release on Friday.
The focus will be on the central bank members' outlook for interest rates in 2024, after the RBI maintained status quo on rates and its stance for the fifth consecutive time, while striking a cautious tone on inflation.
Traders also await a fresh supply of debt as New Delhi aims to raise Rs 300 billion through the sale of bonds.
