India bond yields may inch higher ahead of over $4 bln state debt sale
By Dharamraj Dhutia
MUMBAI, Aug 27 (Reuters) -Indian government bond yields may open a tad higher on Tuesday, as traders brace for higher-than-expected supply from states later in the day, while U.S. Treasury yields remained largely unchanged.
The benchmark 10-year yield IN071034G=CC is likely to move between 6.84% and 6.87%, compared with its previous close of 6.8509%, a trader with a primary dealership said.
"With global factors going quite, focus will once again shift to demand-supply dynamics for the week, starting with state debt auction today followed by benchmark bond sale on Friday."
Indian states aim to raise 362.50 billion rupees ($4.32 billion) through sale of bonds later in the day, and the quantum is larger than the scheduled amount of 294 billion rupees, and also highest for this financial year.
New Delhi is likely to sell bonds worth 300 billion rupees on Friday, which includes the benchmark bond worth 200 billion rupees.
U.S. yields were barely changed on Monday, after economic data signalled cooling in business spending, but moves were limited after yields had already dropped sharply last week.
"Short of a major recession or a risk-off, we are not convinced that 10-year and 30-year U.S. yields should be meaningfully lower than where they are now," DBS said in a note.
Last week, U.S. Federal Reserve Chair Jerome Powell delivered his strongest signal that interest rates will come down in September, saying further cooling in the job market would be unwelcome, while expressing confidence that inflation is within reach of Fed's 2% target.
While a 25-basis-point cut in September is certain, the odds of a 50 bps move eased below 30% after reaching 36% on Monday. For the year, the market is expecting rate cuts of 100 bps, according to CME FedWatch Tool FEDWATCH.
The next major triggers for rate expectations would come from the U.S. Personal Consumption Expenditure (PCE) data due this week and non-farm payrolls and unemployment data due late next week.
KEY INDICATORS:
** Brent crude futures LCOc1 were 0.4% down at $81.10 per barrel, after rising 3.1% in the previous session
** Ten-year U.S. Treasury yield US10YT=RR at 3.8141%, two-year yield US2YT=RR at 3.9294%
** Fourteen Indian states to raise 362.50 billion rupees via the sale of bonds
($1 = 83.8840 Indian rupees)
Reporting by Dharamraj Dhutia; Editing by Rashmi Aich
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
