Indian bonds take a breather before RBI policy outcome
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Amidst anticipation for the Reserve Bank of India’s policy decision, Indian government bonds have remained relatively stable. The yield for the 6.94% 2036 bond is currently 7.2127%. Analysts predict this week could mark the central bank's first rate hike since 2023. Additionally, state borrowing is projected to surpass market expectations, which could impact supply dynamics. Meanwhile, recent US Treasury yields have offered short-term relief amid shifting global financial conditions.
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Loading...×Indian government bonds held steady early Monday as traders stay sidelined ahead of the Reserve Bank of India's policy verdict this week, while softer US Treasury yields temper jitters from a hefty state borrowing programme.The benchmark 6.94% 2036 bond yield was perched at 7.2127%, as of 10:25 a.m. IST, little changed from Thursday's close. The debt market was shut on Friday for a local holiday.
Wednesday's RBI decision is the immediate catalyst, traders said, with markets pricing in the central bank's first rate hike since 2023, amid surging global yields, Brent crude above $100, and policy tightening by major central banks.
Bonds Corner Powered By Kotak MF suspends subscriptions in two debt funds holding Yes Bank AT1 bonds
In a move aimed at protecting investors, Kotak Mahindra Asset Management Company has put a temporary hold on subscriptions for two of its mutual fund schemes. This decision follows the zero valuation of Yes Bank AT1 bonds after a significant bank reconstruction in March 2020. Similarly, Tata Mutual Fund has restricted new investments in the Tata Gold ETF Fund of Fund, although existing investments and redemptions will continue uninterrupted.
Demand for bank loans rises amid hardening yields
Supreme Court rules against Yes Bank's write-off of Rs 8,415 crore AT1 bonds
Torrent Power plans around $500 million bond sale, bankers sayYes Bank shares nosedive 20% after SC declares Rs 8,415 crore AT-1 bond write-off illegal Browse all Bonds News withThe US Federal Reserve and Bank of Japan are among global central banks that have raised rates since the US-Israeli war on Iran began seven months ago.
On the day, a pullback in US yields offers some respite. The 10-year Treasury yield eased to 5.26% after briefly striking a 24-year high on Thursday.
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A softer-than-expected US jobs report on Friday has strengthened bets that the Fed may pause this month. Fed minutes, due Wednesday, could shed further light on the US rate path.
Supply remains one of the Indian market's key overhangs.
States plans to raise 3.61 trillion rupees ($37.48 billion) through bonds in October-December, above market estimates.
"The heavy supply of 10-30 year SDLs, alongside elevated long-end government bond issuance, is likely to keep the term premium under pressure," said Umesh Tulsyan, managing director at Sovereign Global Markets, New Delhi.
The RBI may also announce further measures to draw out excess liquidity, including further open market sales, which could add to supply glut.
Rates
Overnight indexed swaps edged lower, tracking US yields. The one-year OIS was flat at 6.27%, while the two-year rate fell 2 basis points to 6.45% and the five-year slipped 1.75 bps to 6.7%.Add as a Reliable and Trusted News Source Add Now!
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Figures reflect the source report and its stated period. This article is for information and is not investment advice.
