"Also, with more rate hikes on the cards, yields should remain under upward pressure."
DBS Bank expects the benchmark bond yield to rise to the 7.50%-7.55% zone in the next quarter. New Delhi raised 260 billion rupees ($3.14 billion) through the sale of bonds, while the cutoff yield for the liquid 14-year paper was higher than expected which further dampened sentiment. The central government's debt auction cycle ended on Friday, but it aims to raise 15.43 trillion rupees through the sale of bonds in the next financial year. The 10-year U.S. yield though off its recent highs, is set to post its third consecutive weekly climb, hovering close to 3.90%.
U.S. yields have gained on bets that the Federal Reserve may hike rates by 75 bps over the next few months. The Fed has raised rates by 450 bps to 4.50%-4.75% since March 2022. Meanwhile, the minutes of the RBI's latest monetary policy meeting reiterated the hawkish stance, while a majority of market participants now expect the central bank to hike one more time in April. Still, Nomura has assigned a 70% probability for a pause in rates, while ICICI Securities Primary Dealership said April rate hike remains a 50-50 call as of now.
The RBI raised its key repo rate for the sixth consecutive
time earlier this month, taking it to 6.50%, and left the door
open to more tightening.
($1 = 82.7450 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
