Govt bond yields dip as traders await inflation data from India, US

Indian government bond yields ended marginally lower after moving in a narrow range on Tuesday, as investors awaited inflation prints in India and the United States after absorbing heavy debt supply. 

The benchmark 10-year yield ended at 6.6938 per cent compared with its previous close of 6.7024 per cent. 

India's retail inflation for February is due within market hours on Wednesday. A Reuters poll pegs inflation at 3.98 per cent, the first instance in six months the reading would ease below the central bank's target of 4 per cent, which could open up room for another rate cut as early as next month. 

 

US retail inflation is also set to be released on Wednesday. 

"Going ahead, robust kharif (summer-sown crop) production and strong rabi (winter crop) sowing, coupled with the seasonal correction in vegetable prices, augur well for food inflation," STCI Primary Dealer said in a note. 

"However, the recent happenings around the globe pose upside risks in terms of volatility in commodity prices." Indian states sold bonds worth 495.22 billion rupees ($5.7 billion) earlier in the day. States have raised around 210 billion more than scheduled so far in March. Some states have preferred shorter duration bonds. 

India's central bank set to purchase debt worth 500 billion rupees on Wednesday and a similar-sized bond purchase will be happen next week. 

Investors are on the edge globally after US President Donald Trump declined to rule out a recession as a result of his tariff policies. 

Futures are pricing in around 82 basis points of US rate cuts in 2025, up from around 69 bps on Monday.  (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.)