Indian bond yields may partly reverse fall as US peers move higher

Indian government bond yields are expected to marginally reverse their fall in the previous session in early trades on Thursday, as US Treasury yields inched higher.

However, any major move is unlikely, as broader sentiment remains bullish as bets of another larger rate cut from the Federal Reserve remain intact, while some market participants expect a cut in government's gross borrowing.
 

The benchmark 10-year yield is likely to move between 6.72 per cent and 6.76 per cent, compared with its previous close of 6.7355 per cent, which was lowest since Feb. 21, 2022, a trader with a primary dealership said.
 

"There could be some profit booking around opening, but we may not be surprised if the move reverses later in the day, and we see buying momentum continuing, as market is in a bullish grip," the trader said.
 

US bond yields rose, as traders booked profits after a recent fall, and as yields witnessed a floor. However, the possibility that the Fed could do another outsized rate cut remain intact.
 

The Fed had slashed rates by a larger-than-usual 50 basis points last week, and had guided the markets for another 50 bps of cuts in 2024.
 

However, the interest rate futures market has now assigned a 60 per cent probability that the Fed would cut rates by another 50 bps in its November meeting, with aggregate cuts for 2024 seen around 77 bps.
 

Meanwhile, the government is likely to announce the country's market borrowing plan for October-March later in the day, two sources told Reuters.
 

New Delhi aims to raise 14.01 trillion rupees ($167.57 billion) through bond sales in the current fiscal year, with around 6.61 trillion rupees of supply due for the second half, according to budget numbers.
 

The federal government will sell 340 billion rupees of bonds in its last debt auction for the first half of this fiscal on Friday, and this includes liquid five-year and 15-year bonds.

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