Indian bond yields seen steady ahead of govt's $3 bn debt buyback

Indian government bond yields are expected to be little changed in early trading on Thursday ahead of the government's buyback of bonds, while market participants will also await stronger directional triggers.
 

The benchmark 10-year bond yield is likely to move between 6.76 per cent and 6.80 per cent, compared with its previous close of 6.7722 per cent, a trader with a private bank said.
 

"Today's buyback should also see healthy offers as most of the securities are in the money, but I doubt that would provide any major directional push," the trader said.
 

The central government will buyback bonds maturing in the next fiscal year, worth up to 250 billion rupees ($2.98 billion) later in the day. This would be its second such operation in two weeks.
 

Last week the government had repurchased bonds worth around 244 billion rupees in a similar auction. Earlier this financial year, the country had bought back bonds worth about 302 billion rupees.
 

Traders point to the government's strong cash positions resulting in early redemption of bonds, which is also helping the banking system liquidity surplus, especially beneficial as the busy second half has started.
 

Traders also await fresh supply as New Delhi is scheduled to raise 330 billion rupees through the sale of bonds on Friday.

Meanwhile, the benchmark Brent crude continued to remain below $75 per barrel, while the 10-year U.S. yield stayed marginally above the 4 per cent mark
 

India is one of the largest oil importers and easing prices of crude could reduce inflationary pressures. The retail inflation accelerated to a nine-month high of 5.49 per cent in September due to higher food prices, up from 3.65 per cent in August.

The jump in retail inflation prompted several economists to push back interest rate cut bets to the first half of 2025 from early December, with some citing growth as a bigger factor that could determine the timing of a rate reduction.

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