MUMBAI: Indian government bond yields were little changed on Wednesday as investors awaited fresh triggers after a softer-than-expected retail inflation print for April affirmed expectations of a June rate cut by the Reserve Bank of India.
The yield on the new 10-year benchmark bond maturing in 2035 was at 6.2778% as of 10:30 a.m. IST, compared with previous close of 6.2792%.
The yield on the prior benchmark bond was at 6.3316%. It closed on 6.3289% in the previous session The yield on the old 10-year bond had eased 5 basis points on Tuesday.
India’s consumer price inflation in April eased to a near six-year low of 3.16% in April, bolstering hopes of policy easing by the RBI, with Barlcays advancing its expectations of a 25 basis point rate cut to June from August.
“A likely third successive repo rate cut, alongside a sizable liquidity surplus, are set to drag effective rates much lower, aiding monetary transmission,” said Aastha Gudwani, India chief economist at Barclays said in a note.
Indian bond yields set to rise amid widening conflict with Pakistan
India’s average banking liquidity surplus has also widened to nearly 1.5 trillion rupees ($17.56 billion) since the start of May amid the central bank’s continued liquidity injections.
The Reserve Bank of is scheduled to purchase bonds worth 500 billion rupees in two tranches over May.
The RBI will also auction treasury bills worth 190 billion rupees later in the day.
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