India Bond Yields Steady As Traders Eye Monetary Policy Decision

Monday,   06-Dec-2021   02:05 PM (IST)

Indian federal government bond yields were little changed in the afternoon session as investors kept to the sidelines ahead of the Monetary Policy Committee’s decision, due on Wednesday. The benchmark 6.10% bond maturing in 2031 changed hands at 98.11 rupees, yielding 6.37% at 1:00 p.m. in Mumbai, compared with 98.08 rupees and a similar yield on Friday. The rupee was trading at 75.38 to the dollar against 75.16 on Friday. India’s rate-setting panel will start its three-day policy meeting today. The Reserve Bank of India is likely to hike its reverse repo rate early next year and increase its repo rate the following quarter, according to a Reuters poll of economists who were split on whether the latest Covid-19 variant risked delaying those moves. The central bank has left the benchmark repo rate unchanged at a record low of 4% since May 2020, and kept an accommodative stance to boost growth of the pandemic-ravaged economy. The reverse repo rate has also been kept steady at 3.35% since May last year. India is slowly emerging from the coronavirus pandemic, but infections from the Omicron strain, classified as a “variant of concern” by the World Health Organization, pose downside risks to the country’s uneven economic recovery. Meanwhile, the yield on the 10-year U.S. Treasury note reversed from multi-month lows hit on Friday, as investors digested the November U.S. jobs data, which hinted at a tightening in the labour market in the world’s biggest economy. The yield on the 10-year Treasury was last trading at 1.377%, after crashing eight basis points on Friday to close around 1.36%. Benchmark Brent crude futures were 2.05% higher at $71.31 per barrel, after falling almost 4% last week. India imports about 85% of its crude requirements, and a rise in global oil prices risks stoking inflation.