India Bond Yields Steady Amid Absence Of Fresh Triggers

Thursday,   25-Nov-2021   02:20 PM (IST)

Indian federal government bond yields were little changed in a thin-volume afternoon session as traders awaited fresh cues. The benchmark 6.10% bond maturing in 2031 changed hands at 98.08 rupees, yielding 6.37% as of 1:00 p.m. in Mumbai, compared with yesterday’s 98.09 rupees, yielding 6.37%, the highest since Nov. 12. The rupee was at 74.57 to the dollar from 74.40 in the previous session. The federal government will sell 240 billion rupees of notes tomorrow and the auction includes the sale of a new two-year paper. Meanwhile, investors also awaited the rate-setting Monetary Policy Committee’s next interest rate decision on Dec. 8. The central bank is widely expected to revise the reverse repo rate this time as India is emerging from the coronavirus pandemic and most economic activities have resumed. The Reserve Bank of India has started a phased restoration of pre-pandemic liquidity operations and has halted its government debt purchase programme. India’s advance tax collection in the three months to Dec. 31 will likely grow at the same pace as in the previous quarter as a pick-up in economic activities and technology-backed stronger enforcement aid the mop-up, the chairman of Central Board of Direct Taxes said. In the U.S., the minutes of the Federal Reserve’s latest policy meeting reiterated the panel’s willingness to speed up the withdrawal of asset purchases and raise interest rates if inflation persists. The Fed is widely expected to start raising interest rates around the middle of 2022, after tapering its bond purchases. The U.S. 10-year Treasury yield was at 1.643%. The Benchmark Brent crude oil contract was trading little changed at $82.20 per barrel as investors eyed the reaction of the Organization of the Petroleum Exporting Countries to the coordinated supply release by countries including the U.S., India and China. Oil prices have a significant bearing on India's economy as the country imports nearly 85% of its crude oil requirements.