India’s government bond yields are likely to fall at the market open on Monday amid declining U.S. Treasury yields. Traders also await growth data from India for the July-September quarter, to be released later this week.
The benchmark 10-year Indian government bond yield is likely to range between 6.83% and 6.86%, in comparison with last session’s 6.8470%. The yield has been rising over the last two weeks by two basis points. It briefly touched a critical near-term threshold of 6.85% on Friday.
While yields have witnessed a recent surge, analysts believe the bias is still in favor of trend higher in the medium term. However, this correction in US Treasury yield is likely to fetch some interest buying in the Indian bond market. According to a fixed income trader at a bank, the yield falling in the US will help bound investors’ sentiments and gain some relief to the bond market.
The yield on the 10-year US Treasury fell six basis points in Asian trading on Monday after US President-elect Donald Trump nominated Scott Bessent, a prominent investor, as his choice for US Treasury Secretary. This nomination was seen as a positive signal, reducing fears of inflationary tariffs and offering reassurance to market participants. The US yields are also expected to move downward, which will influence global bond markets, including India’s.
India’s third-quarter GDP data is out this week. According to a Reuters poll of economists, India should see a growth rate of 6.5 percent for the said quarter. Growth data may heavily influence expectations regarding future interest rate moves by the Reserve Bank of India (RBI). Next RBI policy decision has been scheduled for December 6.
The PCE data from the US for Wednesday will be another significant event in global markets. The bond yields in the rest of the world could take a cue as to whether the Federal Reserve may cut interest rates at its next policy meeting from the information contained in this data.
Overall, market participants are waiting for key data points this week to color their expectations regarding interest rate trajectories in both the US and India.
