India bonds set to open little changed ahead of local, US inflation data
MUMBAI: Indian government bonds are likely to be little changed in opening deals on Wednesday as traders await the next set of cues in the form of retail inflation prints in India and the United States for clues on the interest rate trajectory. The yield on the benchmark 6.94% 2036 bond is expected to trade in the 6.76% to 6.80% range, according to a trader at a private bank, after closing at…
Mumbai, India: Indian government bonds are expected to open flat on Wednesday, as market participants await key economic indicators from both India and the United States. The yield on the benchmark 6.94% 2036 bond is forecasted to hover between 6.76% to 6.80%, following its close at 6.7791% on Tuesday. Bond yields and prices exhibit an inverse relationship.
Following a brief rally in late trading on Tuesday, the benchmark yield is unlikely to surpass the 6.80% level sustainably, according to a trader from a private bank. Consequently, the trading session is anticipated to be range-bound, with the primary focus on inflation figures.
India's retail inflation data for July is anticipated to show a pick-up to 4.50% from 4.38% in June, as per a Reuters poll. The rising inflationary pressures in India, fueled by heightened oil prices, could potentially burden the fiscal position, current account, and currency of the country, which is the world's third-largest crude importer.
Given that US inflation data will be released after the Indian market closes, market participants are more likely to react to the US economic metrics. The Federal Reserve's probability of raising interest rates in September is now even, with the 10-year Treasury yield trading around the 4.70% mark.
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