India bond yields may nudge higher; US inflation data awaited
By Nimesh Vora
MUMBAI, Nov 27 (Reuters) -Indian government bond yields may inch up on Wednesday, tracking a slight uptick in U.S. rates ahead of key inflation data and expectations of limited downside for local yields from current levels.
The benchmark 10-year bond yield IN067934G=CC is likely to move between 6.8150% and 6.85% through Wednesday's session, according to a fixed income trader at a bank. The yield had dipped at open to 6.8074% on Tuesday following which sellers kicked in to take it higher to 6.8265% at close.
It is "quite evident" that there is little appetite to push the yield below 6.80% right now, the trader said.
"The bias today is on the higher side (for yields). Not by much though, about 1-2 basis points."
The rally in U.S. Treasuries fuelled by Donald Trump's pick oftreasury secretary wore out. U.S. yields nudged up on Tuesday and were slightly higher in Asian hours.
Investor focus is now on U.S. October core PCE data, the Federal Reserve's preferred inflation gauge, due later in the day. The data comes amid uncertainty on whether the U.S. central bank will cut rates at next month's policy meeting.
Currently, it is nearly 50-50 on whether the U.S. central bank will cut or be on hold, per the swap market.
Economists polled by Reuters expect October core PCE to rise 0.3% month-on-month.
"We need the month-on-month to average 0.17% over time to bring the annual rate down to 2% (the Fed's medium-term target), so a 0.3% outcome is too hot for the Fed to be completely comfortable with the inflation story," ING Bank said in a note.
Meanwhile, minutes of the Nov. 6-7 Fed meeting, which were released on Tuesday, showed policymakers appeared divided over how much further they may need to cut interest rates, though many said it was appropriate to reduce policy restraint gradually.
KEY INDICATORS:
** Brent crude futures LCOc1 little changed at $72.82, having nudged lower in the previous session
** Ten-year U.S. Treasury yield US10YT=RR at 4.3050%; had dipped to 4.26% on Monday
** RBI to auction treasury bills worth 190 billion Indian rupees ($2.25 billion)
($1 = 84.3320 Indian rupees)
Reporting by Nimesh Vora;
Editing by Eileen Soreng
Related Assets
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.
