off-the-wire

INDIA BONDS-Indian bond yields seen lower, tracking U.S. peers

Kitco Media
By Reuters
Published:
Updated:
Reuters
By Dharamraj Dhutia MUMBAI, March 16 (Reuters) - Indian government bond yields are likely to trend lower in the early session on Thursday as U.S. yields drop once again, with odds of a status quo in the Federal Reserve's policy meeting next week rising. The 10-year benchmark 7.26% 2032 bond yield is expected to stay in the 7.32%-7.38% band after closing higher at 7.3620% on Wednesday, a trader with a private bank said. "Markets have once again turned volatile and with the two-year yield dipping below 4%, there are increasing calls for a pause in the Fed's rate hike cycle, which should see some bullish bias for Indian bonds as well," the trader said.


U.S. yields slumped on Wednesday after liquidity problems at Swiss banking giant Credit Suisse stoked fears about the impact of rising yields on the global banking sector, while U.S. retail sales fell moderately, down 0.4% in February. The two-year yield, which reflects interest rate expectations, dropped to 3.72%, the lowest since September, before ending at 3.98%. Since the collapse of Silicon Valley Bank, the two-year yield has fallen by 110 basis points (bps). The yield on 10-year Treasury notes declined 14 bps on Wednesday to end at 3.49%. The moves come ahead of the Fed's policy decision, due on Wednesday. Fed funds futures are now pricing in a 65% chance for a 25 bps hike in March and 35% for rates being left unchanged. Falling oil prices will also aid sentiment as India is one of the largest importers of crude and prices have an impact on inflation.


India's retail inflation was at 6.44% in February, above the central bank's target for the second consecutive month, cementing bets of another rate hike in April. Meanwhile, the government's borrowing for April-September is likely to be between 55% and 58% of its gross borrowing target for the next fiscal, according to two government officials. KEY INDICATORS: ** Brent crude futures contract was up 1.2% after falling 4.1% in previous session ** 10-year U.S. Treasury yield was at 3.4998% and the two-year note at 3.9726% (Reporting by Dharamraj Dhutia Editing by Sonia Cheema)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.