Updated January 11th, 2024 at 17:48 IST

Bond yields dip on positive sentiment ahead of US inflation data

Investors keenly await the US inflation data, as it will provide insights into the potential trajectory of interest rates in the world's largest economy.

Reported by: Business Desk
Bond yields dip | Image:Republic World
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Bond market news: Government bond yields experienced a decline on Thursday, reflecting a positive sentiment in the market, as investors anticipated favorable inflation data from the United States. The 10-year benchmark bond yield concluded at 7.1619 per cent, down from the previous day's close at 7.1808 per cent. This week, the yield has collectively eased by seven basis points.

Gopal Tripathi, Head of Treasury and Capital Markets at Jana Small Finance Bank, noted the overall bullish sentiment, stressing that the 10-year US yield's restrained movement, remaining below 4 per cent, has contributed to the positive outlook. Traders reportedly took additional positions ahead of the upcoming US inflation data, anticipating its impact on market dynamics.

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In the US, the consumer inflation reading for December is anticipated to be 0.2 per cent on a monthly basis, with a 3.2 per cent rise in inflation for the 12 months up to December. US bond yields showed a marginal easing, dipping below the critical 4 per cent mark without breaching it in recent sessions.

Investors keenly await the US inflation data, as it will provide insights into the potential trajectory of interest rates in the world's largest economy. Despite earlier expectations of aggressive rate cuts by the Federal Reserve, the odds for a Fed rate cut in March have reduced to 68 per cent, compared to approximately 90 per cent at the end of December, according to the CME FedWatch tool.

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India's retail inflation figures are scheduled to be released after bond market hours on Friday. Projections indicate an increase in the key price gauge, staying within the Reserve Bank of India's target range for the fourth consecutive month. The expected inflation rate is 5.87 per cent on a yearly basis, influenced by elevated food prices compared to 5.55 per cent in November.

Additionally, bond traders are keeping a close eye on New Delhi's debt sale, valued at Rs 33,000 crore, scheduled for Friday. This includes the benchmark and is expected to increase the outstanding debt to Rs 1.69 lakh crore.

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Published January 11th, 2024 at 17:48 IST