India govt bond yields decreased on Thursday after the United States Fed indicated at a pause following an increasingly anticipated rate hike, with the key India bond yield falling below 7 percent for the 1st time in more than 13 months.
For the 1st time since Sept 2017, the difference between the yield on the benchmark 10-year bond. And the repo rate set by the RBI of India has dropped below 50 bps.
At 10:00 a.m. IST, the benchmark 10-year 7.26 percent 2033 bond yield stood at 7.0076 percent after ending at 7.0057 percent the prior session. The yield had fallen earlier in the day to 6.9786 percent, its lowest level since 8 April 2022.
An investor at a private bank said that while the focus will now shift to debt sales. Benchmark yield should consolidate near the 7 percent handle until then. “As expected, Key yield broke the important 7 percent threshold in opening trading.
Through the sale of bonds, New Delhi hopes to raise 330 billion rupees (4.04 billion dollar), including 140 billion rupees of the benchmark 2033 paper.
After the Federal Reserve indicated a pause in its strengthening cycle following an anticipated 25 bp rate hike on Wednesday. The United States Treasury prices increased and yields fell even further.
The current Federal Reserve fund rate ranges from 5.00 to 5.25 percent. Jerome Powell, the chairman of the Federal Reserve, stated that. It is now unclear whether additional hikes will be necessary given the economy’s continued vulnerability to high inflation as well as its signals of slowing down and the potential for a harsh bank lending crackdown.
Powell remarked, “We’re getting there, or maybe even closer to it.
Indian bond yields are rising in line with the United States peers as the Fed meets.
Currently, a pause at the June & July meetings and a rate cut by September are price into the United States rate futures market.
By the end of this year, the market anticipates cuts of between 50 basis points and 75 basis points (bps).
The yield on the United States 10-year bond was 3.33 percent. While the yield on the 2-year bond was 3.80 percent. The key crude oil futures agreement fell even further to its lowest point in almost 2 months, which further helped sentiment.
It had decreased by roughly 9 percent over the previous 2 sessions to reach 72.80 dollar per barrel.
As one of the biggest consumers of the commodity, India’s inflation outlook is encouraged by the decline in oil prices.