There may not be major moves on Tuesday and Wednesday, as the market would wait to assess India and U.S. retail inflation data for a clearer idea about the interest rate trajectory, the trader said.
Bond yields ended higher on Monday, amid continued profit booking from state-run banks even as the market shifted focus on India and U.S. inflation prints for March.
India's consumer inflation likely eased in March to 5.80% thanks to softer food price rises, dipping below the Reserve Bank of India's upper tolerance limit of 6% for the first time in 2023, a Reuters poll of economists found. Last week, the RBI surprised markets by holding its key interest rate steady at 6.50%, after six consecutive hikes, when most expected a 25 basis point rise, leading to a plunge in bond yields.
"With the MPC (Monetary Policy Committee) now setting the
bar high for incremental rate hikes, we believe monetary policy
could see a prolonged pause with flexibility for action if
upside risks to inflation play out," QuantEco Research said.
The U.S. consumer inflation is the last print before the
next Federal Reserve meeting on May 2-3. The data will play a
pivotal role in the Fed's decision on rate hikes with the odds
of a 25 bps raise rising to over 70%.
KEY INDICATORS:
** Brent crude futures contract 0.6% higher at $84.67
per barrel after easing 1.1% in previous session
** 10-year U.S. Treasury yield at 3.4000% and
two-year note at 3.9764%
** Indian states to raise 58 billion rupees via bond sale
($1 = 81.9650 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
