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Updated January 25th, 2024 at 10:25 IST

Bond yields unchanged, awaits direction from debt sale

As of 10:00 am, benchmark 10-year yield stood at 7.1844 per cent, marginally up from its previous close at 7.1835 per cent.

Reported by: Business Desk
Government bonds
Government bonds | Image:ANI
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Bonds unchanged: Government bond yields remained mostly unchanged on Thursday, recovering from a slight dip at the opening, as traders awaited the government's weekly debt auction for a fresh supply of bonds.

As of 10:00 am, benchmark 10-year yield stood at 7.1844 per cent, marginally up from its previous close at 7.1835 per cent. 

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Indian markets will remain closed on Friday on account of Republic Day.

Traders are closely monitoring the crucial 7.18 per cent-7.19 per cent level for the benchmark, anticipating resistance at this point.

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The government aims to raise Rs 33,000 crore ($3.97 billion) through the bond sale, including Rs 16,000 crore of benchmark papers, taking the outstanding issuance to Rs 1.85 lakh crore.

This marks the last weekly debt sale before the Union Budget announcement on Feb. 1.

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Market expectations include a reduction in the government's fiscal deficit to 5.30 per cent of GDP from 5.90 per cent in the current financial year, with a target gross borrowing of Rs 15.60 lakh crore, up from Rs 15.43 lakh crore. 

Net borrowing is anticipated to remain largely unchanged at around Rs 11.80 lakh crore. 

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Traders are also keeping an eye on the evolving liquidity situation in the banking system after the deficit widened to its highest on record on Wednesday.

In the global context, US yields continued to rise on Wednesday, with the 10-year yield hovering near the key level of 4.20 per cent. This followed strong US business activity readings and precedes key data releases this week and the Federal Reserve meeting next week. 

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Recent robust economic data has led to a reduction in bets on the timing and pace of Fed rate cuts in 2024, with the odds of a first US rate cut by March easing to 42 per cent, down from 56 per cent on Jan. 17, according to the CME's FedWatch Tool.

(With Reuters Inputs)

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Published January 25th, 2024 at 10:25 IST

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