2024-04-29 02:39:55
Indian government bond yields are expected to fall slightly at the start of the week, as oil prices and US interest rates move away from recent peaks, while focus will shift to the Federal Reserve’s policy decision on monetary policy.
India’s benchmark 10-year yield is expected to trade in a range of 7.16%-7.21%, following the previous close of 7.1870%, a trader at a primary dealer said.
“Following strong demand during Friday’s auction, there was follow-on buying in the secondary market and this momentum is expected to continue given the slight easing in sovereign and oil yields, but levels of 7.15%-7.16% for the benchmark should hold,” said the merchant.
U.S. interest rates fell on Friday following data showed a key gauge of inflation was broadly in line with expectations.
The price index for personal consumption (PCE) rose 0.3% last month and 2.7% from the previous year. Economists polled by Reuters had predicted the index would rise 0.3 percent month-on-month and 2.6 percent year-on-year.
Still, the data did little to change expectations for a US rate cut, with the Federal Reserve expected to strike a cautious tone in its monetary policy decision on Wednesday, traders said.
According to CME’s FedWatch tool, investors are currently pricing in the possibility of a rate cut of around 34 basis points in 2024, compared to more than 150 basis points at the start of 2024.
Separately, the benchmark Brent crude contract in Asia fell on Monday as peace talks between Israel and Hamas in Cairo eased fears of a wider conflict in the Middle East, which might have added to supply uncertainty.
Indian bond yields fell last week following rising in the first three weeks of the new fiscal year that began in April, as strong demand at the weekly debt auction reinforced views that current levels would be the peak in yields, traders said. KEY INDICATORS: ** Burned down 1% to $88.60 a barrel, following rising 0.6% in the previous session ** Ten-year US Treasury yield at 4.6630%, two-year yield >US2YT=RR> at 4 .9934% (Reported by Dharamraj Dhutia and edited by Sonia Cheema).
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