Indian govt bond yields edge lower as US peers, crude oil prices ease

Indian government bond yields ended lower on Tuesday, tracking U.S. peers and a fall in oil prices.

The 10-year benchmark 7.18% 2033 bond yield ended at 7.2813%, after closing at 7.3074% in the previous session.
 

"The market sentiment turned positive as U.S. yields and oil prices came down, leading to fall in yields," said Debendra Kumar Dash, senior vice president of treasury at AU Small Finance Bank.
 

"Banking system liquidity is also in deficit, which is giving the comfort that the central bank may not announce bond sale," Dash added.
 

Local bond yields opened marginally higher tracking U.S. yields, which rose overnight. The benchmark 10-year U.S.

Treasury yield rose above 4.65% on Monday but eased in Asian trading hours and was last at 4.6141%.
 

Meanwhile, oil prices hit fresh 2-1/2-month lows on Tuesday as mixed economic data from China offset the impact of Saudi Arabia and Russia extending output cuts.
 

The benchmark Brent crude contract fell below $85 a barrel mark, and was last trading at $83.55 a barrel.
 

The fall in local bond yields was limited by the uncertainty over the timing of the Reserve Bank of India's (RBI) first sale of bonds via open market operation, traders said.
 

Bond traders have raised concerns over declining trading volumes since the RBI announced the plan to sell bonds via auctions to absorb liquidity a month ago.
 

A sustained sale of bonds by the central bank in the secondary market has further fuelled the uncertainty. The RBI sold government bonds worth 94.55 billion rupees on a net basis via screen-based trades in the four weeks to Oct. 27, data showed.

Earlier in the day, 13 states raised 257.50 billion rupees via sale of bonds, with the cutoffs in line with market expectations.