Meanwhile, the Indian government should restrict borrowing in the first half of the next fiscal to 55% of the target with a higher share of longer-tenor bonds, market participants said in discussions with the central bank last week, according to multiple traders. KEY INDICATORS: ** Brent crude futures contract was little changed at $82.65 per barrel, after easing 0.8% in the previous session ** 10-year U.S. Treasury yield was at 3.9912% and the two-year note at 5.0553% (Reporting by Dharamraj Dhutia Editing by Sonia Cheema)
By Dharamraj Dhutia
MUMBAI, March 9 (Reuters) - Indian government bond
yields are expected to trade largely unchanged in early session
on Thursday, as traders continue to await fresh triggers, while
the movement in U.S. yields remains crucial.
The 10-year benchmark 7.26% 2032 bond yield is expected to stay in the 7.42%-7.47% band after closing higher
at 7.4547% on Wednesday, a trader with a private bank said.
"At the current levels, the market will need a fresh trigger
in the form of new data to move on either side."
U.S treasury yields inched higher on Wednesday, with the
shorter end rising, as data showed the labour market remained
tight and Federal Reserve Chair Jerome Powell set the table for
higher and faster rate hikes.
Powell's comments on Tuesday to the Senate Banking Committee
opened the door to a 50 basis point interest (bps) rate hike,
potentially as soon as the central bank's next policy
announcement on March 22.
The two-year yield was at 5.05% and the yield curve
inversion between the two-year and 10-year stayed above 100 bps.
Fed funds futures are now pricing in more than a 68% chance
for a 50 bps hike at the central bank's March policy
announcement, while the market has fully factored in an
additional 100 bps hike in the coming months. The Fed has raised rates by 450 bps to 4.50%-4.75% over the
last year. Aggressive hikes from the Fed could force the Reserve
Bank of India (RBI) to follow suit. The RBI has raised the repo
rate by 250 bps to 6.50% this financial year and is likely to
increase it by 25 bps in April.
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