By Bhakti Tambe
MUMBAI, – Indian government bond yields rose on Monday tracking U.S. peers, while focus shifted to demand at a state debt auction later in the day and local inflation print due after market hours.
The benchmark 7.26% 2033 bond yield was at 7.2122% as of 10:05 a.m. IST, after ending the previous session at 7.2021%.
Yields may be rangebound in the near term but with higher volatility, and take guidance from incoming data amid macroeconomic uncertainties and the possibility of inflation remaining elevated, said Mahendra Jajoo, chief investment officer of fixed income at Mirae Investment Managers India.
U.S. yields rose on Friday after producer price inflation came in hotter than expected. Traders fear that the resurgence in price pressures could increase chances that the Federal Reserve will need to continue hiking rates.
The 10-year U.S. yields rose 8 basis points, and was last at 4.1679%.
Later in the day, nine Indian states aim to raise 132 billion rupees ($1.59 billion) through the sale of bonds.
Market participants will also await domestic inflation data, due at 5:30 p.m. IST. India’s retail inflation likely accelerated to 6.40% in July on surging food prices, as per a Reuters poll.
The Reserve Bank of India (RBI) raised its inflation forecast for the quarter and the financial year on Thursday, and held its key lending rate steady at 6.50% for the third straight meeting.
The benchmark yield is expected move in a narrow range during the day as traders may not build heavy positions in a truncated week. India’s fixed income markets will be shut on Tuesday and Wednesday due to local holidays. ($1 = 82.9760 Indian rupees) (Reporting by Bhakti Tambe; Editing by Varun H K)
