India 10-year bond yield hovers at key level before Fed meet
By Dharamraj Dhutia
MUMBAI, Dec 17 (Reuters) -Indian government bond yields ticked up in early deals on Tuesday, with the benchmark yield hovering around the key 6.75% level, which is unlikely to be surpassed ahead of the U.S. Federal Reserve's monetary policy decision.
The 10-year yield IN067934G=CC was at 6.7500% as of 10:00 a.m. IST, compared with its previous close of 6.7430%.
"Everyone is now eyeing the Fed meeting and apart from the rate decision, which is almost a given, majority attention would be on the guidance, as well as updated projections for 2025," a trader with a primary dealership said.
The Fed's decision is due on Wednesday. While the central bank is widely expected to cut interest rates by 25 basis points, markets fear a cautious commentary and an uncertain outlook going into 2025.
The Fed is likely to signal it is in no rush to cut rates further, as inflation remains above its 2% annual target and the labour market remains resilient, analysts said.
The U.S. central bank's quarterly economic projections, including the dot plot, will be under the spotlight. It showed a policy rate of 3.4% by the end of 2025, following the September meeting. The rate currently stands at 4.50%-4.75%.
The odds of 25 bps cut this week stand at over 97%, but the odds of a reduction in January are just around 17%, according to the CME FedWatch Tool.
In India, traders await a fresh supply of debt as states will sell bonds worth 203.25 billion rupees ($2.39 billion) later in the day and New Delhi will sell bonds worth 290 billion rupees on Friday.
Separately, the minutes of the Reserve Bank of India's December meeting are due on Friday and could provide clarity on policymakers' thinking about interest rate trajectory.
($1 = 84.9010 Indian rupees)
Reporting by Dharamraj Dhutia
Editing by Eileen Soreng
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