Mumbai:Government of India bond yields The stock closed slightly higher after a range-bound trading session on Monday, with investors awaiting domestic and US inflation data for clues on the outlook for interest rates.
The benchmark 10-year yield ended at 6.7874%, compared with Friday’s closing level of 6.7762%. Yields traded within one basis point on Monday.
Data due on Tuesday is expected to show that India’s retail inflation rose to a 14-month high of 5.81% in October, mainly due to higher vegetable and edible oil prices.
Reserve Bank of India Governor Shaktikanta Das said last week that October’s inflation print is going to be “much higher”. He also said that the change in policy stance does not mean that there will be a rate cut in December.
“There is likely to be some upward pressure on local bond yields as a rate cut in India in December looks uncertain amid expectations of a higher inflation print in October,” said Yogesh Kalinge, associate director at AK Capital Services.
“We think the 10-year bond yield could rise to 6.85% in the near term, with the pace of the increase being determined by US inflation numbers.”
The US will present October inflation data on Wednesday. Economists expect the US core consumer price index to rise 0.3% month-on-month, matching September’s pace.
Donald Trump’s The US presidential election victory has thrown the interest rate landscape into disarray in the world’s largest economy.
Trump’s victory has fueled expectations of larger fiscal deficits and higher inflation in the future, which will limit the amount of Federal Reserve tapering it can do.
