India bond yields end lower; focus on US jobs data
By Bhakti Tambe
MUMBAI, July 5 (Reuters) -Indian government bond yields ended marginally lower on Friday tracking U.S. peers, while traders awaited key U.S. nonfarm payrolls data for further cues.
The benchmark 10-year yield IN071034G=CC ended at 6.9926%, following its previous close at 6.9994%. The yield ended 2 basis points (bps) lower this week after rising nearly 4 bps last week.
"Index inclusion has just started, but the index flows will continue. Apart from this, the budget is a near-term trigger," Sandeep Yadav, fixed income head at DSP Mutual Fund said.
Foreign inflows have been tepid following the inclusion of Indian debt in JPMorgan's emerging market debt index last week.
Foreign investors have net bought less than 50 billion rupees of debt in a week from the inclusion date, compared to earlier estimates of over 150 billion rupees.
"Possible (interest rate) cuts from the Reserve Bank of India and U.S. Federal Reserve remain a medium-term trigger for bonds," Yadav added.
Meanwhile, the 10-year U.S. yield US10YT=RR was at around 4.33% during Asian hours, while U.S. markets were shut on Thursday.
U.S. yields eased on Wednesday amid growing signs of weakness in the manufacturing sector and the jobs market, suggesting that the world's largest economy was slowing down.
Investors will now closely track the crucial June nonfarm payrolls data, due after Indian market hours, for more clarity on the extent and timing of U.S. rate cuts this year.
While the Federal Reserve has lowered its forecast for rate cuts to 25 bps in 2024, investors continue to expect 50 bps of cuts after recent soft U.S. economic data.
Earlier in the day, New Delhi raised 280 billion rupees ($3.35 billion) by selling bonds through the weekly auction, including the liquid 15-year paper.
Inflation prints in India and the U.S. next week will provide the next set of directional triggers.
($1 = 83.4750 Indian rupees)
Reporting by Bhakti Tambe; Editing by Eileen Soreng
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