Indian govt bond yields seen steady as traders eye fresh triggers

Indian government bond yields are expected to move sideways on Thursday, as traders and investors await a supply of local debt and a key US inflation print, both due on Friday.
 

The benchmark 10-year yield is likely to trade in a 7.16 per cent-7.20 per cent range, following its previous close at 7.1852 per cent, a trader with a primary dealership said.
 

"We saw some reversal in bond yields yesterday, as upside risks to both oil as well as Treasury yields still persist, but for today, we could see thin-range trades being the theme," the trader said.
 

Bond yields declined in the first two days of the week, before giving up some of the fall on Wednesday, as oil prices and US yields continued to be around levels where a further upside is possible.
 

Oil prices eased slightly as concerns about a potential slowdown in the US amid prospects for delayed interest rate cuts have outweighed worries over the risk of expanding conflict in the Middle East.
 

However, the benchmark Brent crude contract continues to remain around $87 per barrel. Elevated crude prices could impact India's retail inflation as the nation is one of the largest importers of the commodity.
 

US Treasury yields moved higher, with the 10-year yield around 4.65 per cent, as traders waited on key economic releases on Thursday and Friday for further clues on Federal Reserve policy.
 

The data will come after a hotter-than-expected inflation reading for March pushed back expectations of rate cuts.
 

Investors are now pricing in the possibility of around 42 basis points (bps) of rate cuts by the Fed by end of this year, according to CME's FedWatch Tool.
 

New Delhi will sell bonds worth Rs 32,000 crore ($3.84 billion) on Friday, which includes Rs 20,000 crore of the 7.10 per cent 2034 paper.

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