MUMBAI, Jan 14 (Reuters) – Indian government bond yields were expected to remain largely unchanged in early deals on Tuesday as it awaited the local currency’s direction, while the pace of rate cuts in the world’s largest economy waned. At stake is US yields that remain high. ,
A trader at a private bank said the 10-year bond yield was likely to rise to between 6.82% and 6.87%, compared with its previous close of 6.8500%. On Monday it posted its biggest single-session rise since June 4.
“With not much change in Treasury yields overnight, the directional trigger will come from movements in the rupee as it has been volatile and on a downward path for the last few days,” said a trader.
The Indian rupee closed at a fresh record low of 86.5750 on Monday, registering its worst one-day fall in two years due to a surge in the US dollar and possible outflows from local equities.
There is a possibility of the currency falling further and reaching a new low on Tuesday.
The 10-year yield was hovering around its highest level since November 2023 during Asia trading on Tuesday, after US jobs growth unexpectedly accelerated in December and the unemployment rate fell below economists’ predictions. Yields remain high.
US yields fell on concerns that the incoming Donald Trump administration’s policies could stoke inflation again, leading to lower rate cuts.
Investors are currently expecting only one rate cut in 2025.
Now all eyes are on the US retail inflation data due on Wednesday.
This follows India’s inflation data for December, which fell to a four-month low. Annual retail inflation fell to 5.22% from 5.48% in November, lower than economists’ expectation of 5.30%. Key Indicators: ** Brent crude futures fell 0.4% to $80.70 a barrel after rising 1.6% in the previous session ** Ten-year US Treasury yields at 4.7737%; Two-year yield 4.3793% ** Ten Indian states to raise Rs 179.19 billion ($2.07 billion) through bond sales ($1 = 86.5990 Indian rupees) (Reporting by Dharmaraj Dhutia, Editing by Sonia Cheema)
