By Dharamraj Dhutia
MUMBAI, April 6 (Reuters) - Indian government bond
yields are expected to be little changed in the early session on
Thursday, as market participants await the Reserve Bank of
India's monetary policy decision and commentary.
The 10-year benchmark 7.26% 2032 bond yield is expected to be in the 7.26 to 7.30% range till the policy
decision, after closing at 7.2750% on Wednesday. India's
financial markets will remain shut on Friday.
More than the rate action, commentary from the RBI would be
the market-moving trigger, a trader said. "If there is a clear
hint that rates would be on prolonged pause after today, we may
see some more rally."
The RBI is widely expected to raise its benchmark rate on
Thursday for the seventh consecutive meeting and leave the door
open for more increases to bring inflation back within its
target range, economists said.
A large majority of economists, 49 of 62, said the central
bank would lift its repo rate by 25 basis points to a seven-year
high of 6.75%.
Easing U.S. yields have led to similar moves in local bonds,
with the 10-year U.S. yield easing to around 3.30% on Thursday
as U.S. job openings in February dropped to the lowest level in
nearly two years, implying labour market is finally cooling.
Meanwhile, traders will also await the first government debt
auction of the current financial year, which will see New Delhi
borrowing a record 15.43 trillion rupees ($188.25 billion).
The government will raise 330 billion rupees via sale of
bonds later in the day which includes a new five-year bond as
well as 7.26% 2033 bond which will replace the existing
benchmark note soon.
KEY INDICATORS:
** Brent crude futures contract was down 0.6% at $84.45
per barrel after staying little changed in the previous session
** 10-year U.S. Treasury yield was at 3.2997% and
two-year note was at 3.7716%
** RBI's Monetary Policy Committee to announce interest rate
decision
** India to sell sovereign bonds worth 330 billion rupees
** RBI to set underwriting fees for 330 billion rupees of
sovereign bond auction
($1 = 81.9670 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Varun H K)
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