The 10-year benchmark 7.26% 2032 bond yield ended at 7.2224% after closing at 7.2313% on Monday.
"After sharp movements recently, yields have remained range-bound and are expected to remain like that until inflation data," said a trader with a private bank.
The U.S. consumer price inflation data for March would be the last set before the Federal Reserve's policy decision due on May 3. It will play a crucial role in the Fed's rate hike decision, with the odds of a 25-basis point (bps) hike rising to over 70%. On the domestic front, India's consumer inflation likely eased in March to 5.80% due to softer food price rises, dipping below the Reserve Bank of India's (RBI) upper tolerance limit of 6% for the first time in 2023, a Reuters poll of economists found. The data, due on Wednesday, will follow the RBI's surprise move last week of holding its key interest rate steady at 6.50% after six consecutive hikes. Most market participants were expecting a raise of 25 bps. "Inflation prints are expected to ease, and the central bank is likely to remain on a long pause for this year," said Vijay Sharma, senior executive vice president at PNB Gilts.
"The benchmark bond yield is expected see a bottom around 7.10%-7.12% levels, and should top around 7.30% levels in the near term."
Meanwhile, four Indian states raised 58 billion rupees
($706.43 million) through sale of bonds at cutoff yields which
were largely along the expected lines.
Traders also await central government bond sale due on
Thursday, wherein it aims to raise 390 billion rupees through
sale of debt which includes a new three-year as well as a
seven-year paper.
($1 = 82.1025 Indian rupees)
(Reporting by Bhakti Tambe; Editing by Nivedita Bhattacharjee)
