India Bond Yields Flattish; US Fed Decision Awaited

Tuesday,   25-Jan-2022   01:13 PM (IST)

Indian federal government bond yields were little changed in the afternoon session ahead of the monetary policy decision by the U.S. Federal Reserve. The new benchmark 6.54% bond maturing in 2032 changed hands at 99.25 rupees, yielding 6.64% at 1:00 p.m. in Mumbai, against 99.19 rupees, and 6.65% yield, yesterday. The Indian rupee was at 74.74 to the dollar as compared with 74.56 in the previous session. Indian financial markets will be closed tomorrow for Republic Day. The U.S. Federal Reserve’s monetary policy decision is due after Asia market hours tomorrow. The rates are widely expected to be left unchanged but the monetary authority could release details on its more-than-$8 trillion balance sheet runoff plans. The 10-year U.S. yield was trading at 1.757%. India’s federal budget is due Feb. 1. New Delhi’s borrowing may remain elevated as it seeks to bolster the recovery in the pandemic-hit economy, analysts have said. India is in the midst of the Omicron-fuelled third wave of Covid-19. Morgan Stanley has slashed India’s this financial year growth estimate by 70 basis points to 9.2%. The house expects the Reserve Bank of India to commence policy normalisation with a reverse repo rate hike in the February meeting and expects the repo rate hike cycle to begin in April. India’s monetary policy decision is due on Feb. 9. Meanwhile, The benchmark Brent crude futures were 0.68% higher at $86.01 per barrel amid supply worries. It fell 1.8% yesterday, its biggest single-session drop in nearly a month. India imports about 85% of its crude oil requirements.