India Bond Yields Stay Down As September Inflation Below Estimate

Wednesday,   13-Oct-2021   02:08 PM (IST)

Indian federal government bond yields were lower in the afternoon session as the September retail inflation print fell below market expectations, easing to a five-month low. The benchmark 6.10% bond maturing in 2031 changed hands at 98.41 rupees, yielding 6.32%, at 1:00 p.m. in Mumbai against 98.36 rupees and 6.33% yesterday. The Indian rupee was at 75.41 to the dollar against 75.51 yesterday. Inflation slowed to 4.35% last month from 5.30% in August, easing for the fourth straight month and lagging the 4.50% median forecast in a Reuters survey of economists. However, core inflation rose to 5.9% from 5.8% in the prior month, according to Nomura. India’s central bank, which expects inflation to average at around 5.3% in this financial year, has kept the key policy rate at a record low since last year, looked through inflation and committed to stay accommodative for as long as necessary to lift the Covid-hit economy. Market participants expect that surging crude oil prices will exert an upward pressure on the country’s inflation outlook as India imports nearly 85% of its crude oil requirements. The benchmark Brent crude contract was little changed at $83.38 per barrel. Meanwhile, investors also awaited the September consumer price index reading in the U.S. as well as minutes of the Federal Reserve’s latest meeting due later today. The yield on the 10-year Treasury note was at 1.587%, down from its over-four-month high of 1.6310% hit earlier this week.