India bond yields drop as Trump's Treasury pick eases US market concerns

Indian government bond yields declined on Monday, mirroring US Treasury yields, prompted by US President-elect Donald Trump's selection for Treasury secretary, who is expected to rein in the country's debt. 

The benchmark 10-year bond yield ended at 6.8226 per cent, down two basis points from Friday. 

The 10-year US yield declined six bps on Monday after Trump on Friday said he will nominate prominent investor Scott Bessent as Treasury secretary, a key cabinet position with vast influence over economic, regulatory and international affairs. 

Bessant, who is a fund manager, is seen a fiscal conservative and will likely to want to keep a leash on US

 

deficits. 

The 10-year US yield is now down 15 bps off its recent peak. 

"Today's rally seems temporary as there is little scope for the 10-year yield to fall below 6.75 per cent as domestic interest rate cuts are expected to be delayed," said Yogesh Kalinge, associate director at A.K. Capital Services. 

Investors have had to reconsider their rate cut expectations in India amid higher domestic inflation. 

India's inflation accelerated to 6.21 per cent in October, above the central bank's target range of 2 per cent-6 per cent for the first time in 14 months, dashing hopes of a rate reduction in December. 

Domestic growth data, due on Friday, will help investors assess the timing of the next rate cut amid concerns over inflation. 

"A status quo policy in December is factored in by the bond market, but a February rate cut also looks dicey," Kalinge said.

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