Updated February 15th, 2024 at 17:33 IST

Government bond yields retreat, eyes on last debt sale of fiscal year

The benchmark 10-year yield settled at 7.0883 per cent, down from its previous close of 7.1110 per cent.

Reported by: Business Desk
Government bonds | Image:Republic
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Government bond yields ended lower on Thursday, mirroring a decline in US counterparts, as market attention turned towards the impending debt sale marking the final issuance for the current financial year.

The benchmark 10-year yield settled at 7.0883 per cent, down from its previous close of 7.1110 per cent, with market sentiment influenced by movements in US bond markets. A foreign bank trader noted that while local factors like the Reserve Bank of India's (RBI) policy and the budget have already been addressed, global dynamics, particularly those in the US, continue to steer bond market movements.

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Government aims to raise Rs 30,000 crore through the upcoming debt sale, with market participants closely watching for directional cues from the auction.

In the US, yields eased following remarks from Chicago Federal Reserve President Austan Goolsbee, who signalled that the central bank remains committed to its 2 per cent inflation target even if price increases surpass expectations in the near term. The stance tempered expectations for rate cuts, with the 10-year US yield touching a high of 4.33 per cent before settling at 4.22 per cent during Asian trading hours.

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Market expectations for a Fed rate cut in June currently stand at 78.5 per cent, according to the CME's FedWatch Tool, with reduced odds of a cut in May compared to previous weeks.

In India, market participants have adjusted their expectations for rate cuts following the RBI's recent policy statement, which maintained a hawkish tone to tame inflation. Sunil Kumar Sinha, principal economist at India Ratings and Research, anticipates that the RBI will maintain policy rates during the first half of fiscal year 2025, with potential easing measures contingent upon data trends later in the year.

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(With Reuters inputs)
 

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Published February 15th, 2024 at 17:33 IST