Indian bond yields expected to inch up as 10 year US yield tops 4%

Indian bond yields are expected to move marginally higher in opening deals on Tuesday as the 10-year US yield crossed the key 4 per cent mark, while bets of the Federal Reserve not cutting interest rates next month rose slightly.
 

The benchmark 10-year bond yield is likely to move between 6.83 per cent and 6.87 per cent, compared with its previous close of 6.8507 per cent, a trader with a private bank said.
 

"Bonds were volatile yesterday, but at the end, bears had their way with the closing on the benchmark just above 6.85 per cent mark, and we should see some pick-up from that point, at least in the initial part of the session," the trader said.
 

US yields rose overnight, with the 10-year yield climbing above 4 per cent for the first time in more than two months, while a widely watched part of the yield curve briefly inverted as bets of a large Fed rate cut completely vanished.
 

The US two-year yield, which is more sensitive to changes in monetary policy expectations, reached its highest in nearly two months, as strong nonfarm payroll data dashed hopes of 75 basis points of rate cuts in 2024.
 

Expectations of a 25 bps cut in November are at 88 per cent, while bets of no cut rose to 12 per cent from less than 10 per cent a day ago.
 

Back home, traders are waiting for the Reserve Bank of India's monetary policy decision on Wednesday, where the central bank is expected to maintain a status quo on rates.
 

A small number of investors are betting on the probability of a change in stance to "neutral", opening the door to rate cuts as economic growth slows and global rates ease.
 

Traders will also look out for an announcement from FTSE Russell for including Indian bonds in its emerging market debt index.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)