India bonds rise after flat open as sharp drop in US yields spurs value
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The Indian government bond market saw a positive turnaround as US Treasury yields declined, prompting significant value purchases. The benchmark 6.94% bond maturing in 2036 observed a yield of 7.3551% in morning trading. Concurrently, oil prices dipped, fueled by expectations of improved supply following lifted sanctions on Russia. With India's consumer inflation rising to 5.54%, the Reserve Bank of India may respond with tighter financial conditions amidst ongoing capital outflows.
Indian government bonds turned higher on Monday, recovering from a flat start to the holiday-shortened week, as a sharp drop in US Treasury yields more than offset oil-related inflation concerns and spurred value buying.The benchmark 6.94% 2036 bond yield was at 7.3551% as of 10:25 a.m., after closing at 7.3789% in the previous session. Indian debt markets will remain shut on Tuesday for a local holiday.
India's 10-year benchmark bond yield has risen for a record nine consecutive weeks, climbing 62 basis points in total.
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Oil, foreign flows in focus for rupee; bond traders eye rate-hike bets
During the upcoming holiday week, analysts predict the Indian rupee will remain steady, with oil price trends and foreign capital flows playing essential roles. Impressively, the rupee rose by 2% last week, achieving its highest value since March at 94.96. The Reserve Bank of India is undertaking assorted measures aimed at strengthening the rupee while addressing inflation worries.
YES Bank book value may fall up to 26% after SC ruling on AT-1 bondsAggressive RBI measures hand India bonds a ninth weekly lossIndian bonds hang tight ahead of supplyKotak MF suspends subscriptions in two debt funds holding Yes Bank AT1 bonds Browse all Bonds News with"Treasuries are rising with a breathtaking speed in the last few days, and Indian debt is bound to follow, even though at a very smaller magnitude due to local factors," trader at a primary dealership said.
The 10-year US yield dropped last week, and was around 5.05% levels, as investors assessed the latest economic data and bet that the Federal Reserve's next rate hike will not come until December.
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Meanwhile, oil prices eased in Asian hours as markets eye better supply after President Donald Trump's decision to waive sanctions and tariffs on Russia.
India's September consumer inflation accelerated to 5.54%, and is on track to cross the 6% upper end of the central bank's tolerance band in October, economists said.
Reserve Bank of India Governor Sanjay Malhotra said last week the central bank may use monetary policy to safeguard financial stability.
The RBI is expected to tighten financial conditions further to stem capital outflows and raise the cost of shorting the rupee, people familiar with the matter and analysts told Reuters.
RATES
India's overnight indexed swap (OIS) rates dropped tracking a decline in Treasury yields.The 1-year OIS was down 7 bps to 6.48%; the 2-year rate eased 8 bps to 6.54%, while the 5-year rate was down to 6.74%.
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Figures reflect the source report and its stated period. This article is for information and is not investment advice.
