India bond yields end flat; post second straight monthly decline
By Dharamraj Dhutia
MUMBAI, Aug 30 (Reuters) -Indian government bond yields ended largely unchanged on Friday, but the benchmark yield declined for a second straight month on expectations that rate cuts will start in the United States from September.
The benchmark 10-year yield IN071034G=CC ended at 6.8647%compared with its previous close of 6.8637%. The yield fell 6 basis points in August, after slipping 9 bps in the previous month.
"We could see some impact from the Federal Reserve's easing, but unless and until the Reserve Bank of India indicates cuts, yields may find it tough to fall further," Soumyajit Niyogi, a director at India Ratings & Research said.
The U.S. will release the personal consumption expenditure data, the Federal Reserve's preferred gauge to measure inflation, later in the day, and the all-important non-farm payroll data next Friday.
The data is key to whether the Fed cuts rates by 25 basis points or 50 bps next month.
Fed Chair Jerome Powell last week delivered his strongest signal that interest rates will come down in September.
There is a one-in-three chance of a 50 bps cut next month while futures predict cuts of above 100 bps in 2024. FEDWATCH
India is set to release April-June economic growth data after market hours.
A Reuters poll expects gross domestic product to have grown an annual 6.9%, down from 7.8% in the preceding quarter, due to lower government spending.
A weak growth print could be positive for bonds.
Foreign inflows continue to cap a major upside in government bonds yields, and the central bank's recent curbs on buying longer-duration papers have made no dent in appetite.
Reporting by Dharamraj Dhutia; Editing by Mrigank Dhaniwala
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