The 10-year benchmark 7.26% 2033 bond yield is expected to be in the 7.00-7.05% range, a trader with a primary dealership said, after closing at 7.0234% in the previous session. "Bond yields will now take cues from today's debt auction as the cut-offs will help the market gauge the demand for government papers," the trader added. Bond yields eased on Thursday as cooling U.S. inflation increased bets of the Federal Reserve not raising interest rates at its June meeting. "We are tactically cautious on India 10-year in the near-term and see yields rising, but medium term we see 10-year yield easing towards 6.75% by the end of FY24," Emkay Global Economist Madhavi Arora said in a note. Arora sees a "fair case" for open market operations worth 1.5 trillion rupees in the current financial year leading to durable liquidity injection.
The Indian government aims to raise 390 billion rupees ($4.77 billion) through bonds later in the day.
Market participants also await local inflation data for
April, which likely cooled to an 18-month low of 4.80%, below
the Reserve Bank of India's (RBI) upper tolerance limit for the
second consecutive month, according to a Reuters poll.
The RBI had surprised the market with a status quo on rates
in its April policy.
KEY INDICATORS:
** Brent crude futures down 0.4% at $74.74 per barrel
after falling 1.8% in the previous session
** 10-year U.S. Treasury yield at 3.3824% and
two-year note yield at 3.8932%
** India to sell sovereign bonds worth 390 billion rupees
** RBI to set underwriting fees for 390 billion rupees sovereign
bond auction
($1 = 81.7800 Indian rupees)
(Reporting by Bhakti Tambe; editing by Eileen Soreng)
