INDIAN BONDS – Indian bond yields are stable at the start of the week.

INDIAN BONDS – Indian bond yields are stable at the start of the week.
INDIAN BONDS – Indian bond yields are stable at the start of the week.

Indian government bond yields are expected to remain stable at the start of the week, amid consolidation around current levels, while traders await new triggers for a further decline.

The benchmark 10-year yield is expected to move in a range of 6.98%-7.02% on Monday, after its previous close of 6.9988%, a trader at a state bank said.

“With the benchmark yield already sitting around 7%, we may not see an easy move towards 6.95%, and there could be some sort of struggle between buyers and sellers around these levels, and even US yields firmed slightly,” the trader said.

Bond yields fell for the fifth consecutive week, after the Reserve Bank of India board approved the transfer of a record surplus of 2.11 trillion rupees ($25.40 billion) to the government for the fiscal year 2024.

The government’s fiscal position is expected to strengthen after a larger-than-expected dividend transfer and could further reduce supply pressure, supporting supply-demand dynamics, traders said.

New Delhi has already reduced the supply of treasury bills by 600 billion rupees until June, and bought back securities worth around 179 billion rupees in May.

According to several sources, the government is open to buying back more bonds and reducing the supply of treasury bills for short-term liquidity management, while the decision on reducing the fiscal deficit and borrowing on The market will be taken after the formation of a new government.

US yields finished higher last week, with the 10-year yield nearing the 4.50% mark, while the two-year yield neared the 5% mark, data and commentary of the Federal Reserve having once again reduced rate reduction forecasts for 2024.

Futures markets are now pricing in only about 34 basis points of rate cuts this year, down from more than 50 basis points earlier this month, according to the CME’s FedWatch tool. KEY INDICATORS: ** Ten-year US Treasury yield is 4.4730%, two-year yield is 4.9530% ** India to trade government bonds worth 220 billion of rupees ($1 = 83.0710 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Rashmi Aich)

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