Benchmark bond yield declines to six-week low, in line with US peers

The benchmark 10-year yield is likely to move in the 7.09-7.14% range, following its previous close of 7.1067%

India's benchmark government bond yield slipped to a six-week low in early trading on Wednesday tracking a decline in US Treasury yields, as markets awaited the US consumer price inflation report.
 

The benchmark 10-year yield was at 7.0926 per cent as of 10:00 a.m. IST, following its previous close of 7.1067 per cent.

Earlier in the day, it fell to 7.0851 per cent, the lowest since April 2.
 

"Bulls are having a strong grip for now, but if buying does not sustain through the session, we could see benchmark ending closer to round 7.10 per cent, as state-run banks are continuously on offers," a trader with a primary dealership said.
 

State-run banks have sold nearly $1 billion of government bonds so far this month, after remaining the largest buyers in the first month of the financial year.
 

US yields fell overnight and stayed lower in Asia hours on Wednesday, aided by Federal Reserve Chair Jerome Powell saying he expects inflation will fall in coming months.
 

The 10-year yield was below 4.45 per cent, close to a five-week low, while bets of a 25 basis point rate cut in September rose to 65 per cent from 61 per cent a day before.
 

The US CPI is due after Indian market hours and economists polled by Reuters expect the closely-watched core inflation to rise by 0.3 per cent in April, down from 0.4 per cent in March, for an annual gain of 3.6 per cent, down from 3.8 per cent.
 

Traders also await the response to the Indian government's second bond buyback in two weeks.
 

This would be followed by a fresh debt auction worth 31,000 crore rupees ($3.71 billion), which includes 20,000 crore rupees of the upcoming benchmark 7.10 per cent 2034 bond.
 

The central bank will sell Treasury bills worth 27,000 crore rupees later in the day.

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