Govt bond yields steady as traders await key data, Friday's debt sale

Indian government bond yields ended little changed on Thursday, with the benchmark yield holding above the key 6.85 per cent mark as traders awaited key data and Friday's debt supply.
 

The benchmark 10-year yield ended at 6.8637 per cent, compared with its previous close of 6.8605 per cent.
 

"All eyes are on GDP data of both US and India," said Anitha Rangan, an economist at Equirus Group.
 

"If US growth remains firm, then case for aggressive rate cuts will get pushed back. For India, heatwaves and election could have led to some moderation in growth. While there are no signs of slowdown, but it could be a temporary holdup." US growth data is due after Indian market hours on Thursday. Any sign of weakness would raise bets of a 50-basis-point rate cut from the Federal Reserve in September.
 

The growth report would be followed by the personal consumption expenditures data on Friday, the Fed's preferred gauge to measure inflation.
 

Fed Chair Jerome Powell had last week delivered his strongest signal that interest rates will come down in September.
 

While a rate cut is certain next month, bets are split between a 25-basis-point and a 50-bp cut, with odds of the latter remaining around 35 per cent. For 2024, markets are expecting cuts of just above 100 bps.
 

Meanwhile, India's April-June growth data is due after market hours on Friday, and a Reuters poll expects gross domestic product to have grown an annual 6.9 per cent, down from 7.8 per cent in the preceding quarter, due to lower government spending.
 

Moody's raised India's growth projection for 2024 and 2025 citing signs of improving rural demand. It now expects India's economy to expand 7.2 per cent in 2024 from 6.8 per cent previously, while growth for 2025 is pegged at 6.6 per cent versus 6.4 per cent.
 

Traders also await fresh debt supply as New Delhi will sell bonds worth Rs 30,000 crore ($3.58 billion) on Friday.


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