India Bond Yields Stay Up Mirroring US Treasuries, Crude Oil

Friday,   24-Sep-2021   01:40 PM (IST)

India's federal government bond yields stayed higher in the afternoon session tracking a spike in U.S. Treasury yields and crude oil prices. Bond investors awaited the outcome of a 310-billion-rupee weekly debt sale for further cues. The benchmark 6.10% bond maturing in 2031 changed hands at 99.41 rupees, yielding 6.18%, at 1:00 p.m. in Mumbai against 99.70 rupees and 6.14% yesterday. The Indian rupee was at 73.75 to the dollar against 73.64 yesterday. The U.S. 10-year Treasury yield jumped 14 basis points to close at 1.44% yesterday, its highest in nearly three months, amid a slightly hawkish tilt from the Federal Reserve earlier this week and its signal to start scaling back asset purchases by the next meeting. The benchmark Brent crude contract rose to an over two-month high, amid tighter supplies and strong appetite for riskier assets globally. The Brent contract was last at $77.39 per barrel. India imports nearly 85% of its crude oil requirements. India’s central bank, which has been looking through above-target inflation to ensure that growth is sustained in the Covid-hit economy, is buying debt through various operations to ensure New Delhi’s borrowing costs remain capped. The details of the federal government’s borrowing schedule for the fiscal second half are expected on Sep. 27, a finance ministry official told NewsRise. The listing of India’s sovereign bonds on global indices and the fallout from China Evergrande Group’s debt crisis should help lower yields that have remained stubbornly high despite several rate cuts and massive debt purchases by the central bank, analysts said. New Delhi has been working on including its debt in global bond indices since 2019, and has allowed foreign investments outside the macro-prudential limit. The RBI is scheduled to buy up to 150 billion rupees of federal government bonds and simultaneously sell short-end papers worth a similar quantum on Sep. 30. It held a similar buy-sell auction yesterday.