India bond yields slightly lower ahead of GDP data, weekly auction
By Siddhi Nayak
MUMBAI, Nov 28 (Reuters) -Indian government bond yields ended slightly loweron Thursday, with investors eyeing domestic growth data and weekly debt auction, both due on Friday, for directional cues.
The benchmark 10-year bond yield IN067934G=CC ended at 6.8039%, compared with 6.8123% at the close on Wednesday.
Bond bulls were "very active" in early trades on Thursday, given the overnight rally in U.S. Treasuries, but could not get past the "strong" support of 6.80% on the 10-year yield, a fixed income trader at a private sector bank said.
The 10-year U.S. Treasury yield slipped six basis points on Wednesday despite U.S. inflation data indicating that the Federal Reserve is likely to be cautious in cutting interest rates.
Focus now turns to India's gross domestic product data that will help traders gauge the extent of the economic slowdown and mould expectations on when the Reserve Bank of India will cut rates.
The data is expected to show that the economy grew at 6.5% in July-September, the slowest pace in one-and-a-half years, due to slackening demand.
"The bond market expects India's GDP growth to be softer around 6.6% for July-September, but that will not move the needle for a December rate cut, given inflation is expected to stay elevated," said Anshul Chandak, head of treasury at RBL Bank.
The extent of the slowdown in the economy will throw light on whether the central bank will cut rates at the February meeting amid concerns over inflation.
The RBI's Monetary Policy Committee will meet next week and then in February.
Market participants will also eye the cutoffs of the weekly debt auction worth 300 billion rupees for cues on Friday.
"We think the upside pressure on bond yields will continue; this is largely a sell-on-rallies market and the 10-year yield seems locked in a range of 6.80% to 6.90%," Chandak added.
Reporting by Siddhi Nayak;
Editing by Eileen Soreng
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