A Reuters poll showed retail inflation in India likely eased to 6.35% last month but stayed above the Reserve Bank of India's (RBI) upper tolerance limit for a second straight month. The RBI is likely to increase it by 25 bps in April. Meanwhile, investors should start investing in longer-duration bonds and funds that could offer better returns in the medium term, said Parijat Agrawal, head of fixed income at Union Asset Management. "The absolute yield levels are high today, and as rates come down, longer-duration funds are expected to be attractive on account of high accruals and mark-to-market gains." (Reporting by Dharamraj Dhutia; Editing by Dhanya Ann Thoppil and Janane Venkatraman)
By Dharamraj Dhutia
MUMBAI, March 10 (Reuters) - Indian government bond
yields ended lower on Friday, mirroring the drop in U.S. yields,
while markets awaited U.S. non-farm payroll data, due later in
the day.
The 10-year benchmark 7.26% 2032 bond yield ended at 7.4321%, after closing at 7.4449% on Thursday. The
yield rose one basis point (bps) for the week.
"Domestic yields were lower following the sharp decline in
U.S. yields. Traders stayed light ahead of non-farm payrolls
data," said V.R.C. Reddy, treasury head of Karur Vysya Bank.
U.S. yields fell on Thursday and Friday as risk appetite
weakened after an equities selloff and as data showed U.S.
initial jobless claims rose more than expected last week.
The yield on two-year bonds dropped by 25 bps to 4.82% since
Wednesday's close, while that on the 10-year paper fell 12 bps
to 3.85%.
Traders now await the jobs report, which is expected to show
an increase of 205,000 in February, according to a Reuters
survey of economists.
A softening job market could calm the fears of an aggressive
rate hike by the Federal Reserve. Fed funds futures are now
pricing in a 52% chance for a 50 bps hike in March, down from
68% after Chair Jerome Powell's comments. The jobs data will be followed by retail inflation readings
in India and the United States on Tuesday.
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