As market participants anticipated new supply from the weekly debt auction and essential data for additional directional changes, Indian government bond rates remained stable in early trades on Friday.
As of 10:00 a.m. IST, the yield on the 10-year bond was 6.7625%, down from its previous closing of 6.7646%. Later in the day, New Delhi plans to sell bonds to generate 220 billion rupees ($2.56 billion). According to a trader, the market will be driven in the immediate future by demand at the auction, followed by inflation and U.S. job statistics.
Ahead of a significant employment report that might decide the degree of monetary policy easing by the Federal Reserve, U.S. Treasury rates remained high, with the 10-year yield hovering around 4.68% in Asia hours.
The December nonfarm payroll statistics, which will be released after Indian market hours, may provide some insight into the likelihood that the Fed’s prediction that it will only lower rates twice this year will pass.
Concerns that the policies of incoming US President Donald Trump may increase inflation rather than growth, which would result in fewer rate cuts, have caused U.S. yields to rise.
Currently, interest rate futures are pricing in just 43 basis points of U.S. rate cuts in 2025, less than the Fed’s forecast of 50 basis points.
Before the central banks of both nations announce their next policy choices, the jobs data would be followed by inflation statistics from India, the largest economy in the world. The strong getting by foreign banks earlier this week caused India’s benchmark bond yield to a three-week low of 6.73%.
But subsequently, when rates in the biggest economy in the world increased dramatically, these lenders sold bonds. $1 is equal to 85.8650 Indian rupees. (Dharamraj Dhutia reported; Mrigank Dhaniwala edited.)
