The minutes of the Reserve Bank of India's (RBI) latest monetary policy meeting is due on Thursday and will provide more clarity on the central bank's stance on interest rates. The RBI had surprised the markets by maintaining the status quo on policy rates, against wide expectations of a 25-basis-point hike. A dip in inflation cemented bets that the central bank will now maintain a prolonged pause. India's retail inflation for March was at 5.66%, dipping below the RBI's upper tolerance level of 6% for the first time in 2023 and the lowest since December 2021. "With tight liquidity, high gross T-bill issuance will keep the curve flat. Overall, while the peak of rate hikes is largely in sight, tight liquidity and supply pressures are likely to keep yields elevated," said Anitha Rangan, an economist at Equirus. Meanwhile, the 10-year U.S. yield continues to trade around 3.60% levels as odds of a rate hike by the Federal Reserve on May 3 have risen to around 86%. The current target range is 4.75%-5.00%, up from near zero in March 2022. Investors will also await the central government debt sale due on Friday. New Delhi will raise 330 billion rupees ($4.02 billion) via the sale of bonds, which includes the 7.26% 2033 bond that will soon replace the existing benchmark paper. KEY INDICATORS: ** Brent crude futures contract was 0.1% lower at $84.65 per barrel after being flat in previous session ** 10-year U.S. Treasury yield at 3.5851% and two-year note at 4.2157% ** RBI to auction Treasury bills worth 320 billion rupees ($1 = 82.0780 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Eileen Soreng)
By Dharamraj Dhutia
MUMBAI, April 19 (Reuters) - Indian government bond
yields are expected to be largely unchanged in the early session
on Wednesday, as traders await fresh triggers including the
minutes of the latest central bank meeting.
The 10-year benchmark 7.26% 2032 bond yield is expected to be in the 7.20% to 7.25% range, after closing at
7.2207% in the previous session, a trader with a private bank
said.
After Tuesday's recovery, bond yields are at levels where
people may not prefer to add more stock, and hence we may be in
for a rangebound trading session today and tomorrow, the trader
added.
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