($1 = 81.8050 Indian rupees) (Reporting by Bhakti Tambe and Dharamraj Dhutia; Editing by Savio D'Souza)
By Bhakti Tambe and Dharamraj Dhutia
MUMBAI, April 27 (Reuters) - Indian government bond
yields ended marginally lower on Thursday as traders awaited
fresh supply via the debt auction at the end of the week and for
the U.S. Federal Reserve's policy decision next week.
The 10-year benchmark 7.26% 2033 bond yield ended at 7.0987%, after closing at 7.1126% on Wednesday.
"We have already seen a decent rally since the last auction,
but it would be crucial to see how the demand for the next set
of auctions pans out," said Gopal Tripathi, head of treasury and
capital markets at Jana Small Finance Bank.
"Crucial U.S. data and the Federal Reserve policy decision
next week would act as a crucial guidance."
U.S. March-quarter GDP data and weekly jobless claims are
due later in the day.
New Delhi aims to raise 310 billion rupees ($3.79 billion)
through the sale of bonds this Friday, including from the sale
of the liquid 14-year bond that has been leading the price gains
in the last few days.
Bond yields have been easing for the past five sessions
after strong demand at last week's debt auction led to a sharp
fall in yields in the secondary market.
Major buying from foreign banks as well as traders has led
to the current rally, on rising bets of policy pivots from both
the U.S. and Indian central banks.
Indian bond yields will continue to fall this fiscal year,
as the Reserve Bank of India is unlikely to hike interest rates
any further, said Ashish Agrawal, head of FX and EM macro
strategy research for Asia.
"The RBI's policy pause has led to comfort on the policy
outlook. Comments about the inflation outlook have also helped.
Post the pause, we expect the 10-year yield should ease to the
6.75%-7.00% range by the end of this financial year."
Meanwhile, the odds of a 25-basis-point rate hike by the Fed
on May 3 have eased to below 80%, from above 90% last week, amid
continued concerns about the regional banking sector and ahead
of a possible vote on the U.S. debt ceiling.
The RBI maintained status quo on its policy rate earlier
this month and easing domestic inflation - India's March retail
inflation dropped to 5.66% and is set to ease below 5% in April
- has cemented bets of a prolonged pause.
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