The 10-year benchmark 7.26% 2033 bond yield is expected to be in the 7.10% to 7.15% range after closing at 7.1196% in the previous session, a trader with a private bank said. Bond yields plunged in April, with the benchmark yield dropping 20 basis points on bets of policy pivots.
With the U.S. Treasury prices displaying their falling bias, some impact is likely to be visible on Indian bonds as well, with a rate hike at tomorrow's meeting now a done deal, the trader said.
U.S. yields moved higher, with the 10-year yield rising above the 3.55% mark, and the two-year yield at 4.12%, after news that the government seized First Republic Bank and sold its assets to JPMorgan Chase & Co.
The move comes ahead of the Fed policy decision due on May 3, wherein a 25 basis-point rate hike is widely factored in, and the focus would be on Chair Jerome Powell's comments. The odds of a 25 basis-point rate hike by the Fed have risen close to 95%. A hawkish Fed could also influence the Reserve Bank of India, which maintained a pause on rates in a surprising move last month.
Focus would also remain on demand for the debt auction in the holiday-shortened week. New Delhi aims to raise 330 billion rupees through the sale of bonds on Thursday, and the auction includes 140 billion rupees of the benchmark 2033 paper.
Indian fixed income markets were shut on Monday and will be
closed on Friday for a local holiday.
KEY INDICATORS:
** Brent crude futures contract little changed at $79.30
per barrel after easing 0.3% in the previous session
** 10-year U.S. Treasury yield was at 3.5547% and
two-year note at 4.1283%
** Six Indian states to raise 102 billion rupees via bond sale
(Reporting by Dharamraj Dhutia
Editing by Eileen Soreng)
