MUMBAI: Indian government bond yields were largely unchanged in early deals on Tuesday, with a bias towards the downside, as market participants await fresh triggers, while bets of further monetary policy easing continue to support.
The yield on the new benchmark 10-year bond was at 6.2032% as of 10:00 a.m. IST, compared with the previous close of 6.2046%.
The more liquid 2034 bond yield was at 6.2514% after settling at 6.2539% on Monday.
“After heavy activity, we expect bonds to move sideways for a couple of days, before reacting to the next set of triggers in the form of auction and growth data,” a trader said.
New Delhi will sell the benchmark 2035 bond worth 300 billion rupees ($3.52 billion) on Friday, followed by the country’s economic growth data for January-March.
The economy likely grew 6.7% in January–March, up from 6.2% in the previous quarter, according to a Reuters poll.
India rate cut bets cap upward move in bond yields post RBI surplus letdown
The growth data would be followed by the Reserve Bank of India’s policy decision on June 6, where a third consecutive rate cut of 25 basis points is widely expected.
The RBI has cut the repo rate by a total of 50 basis points since February and has infused around $100 billion into the banking system in the last six months.
Bond yields are expected to decline further in the medium term, even as the central bank’s surplus transfer of 2.69 trillion rupees to the government fell short of market expectations.
