Indian government bond yields are expected to open broadly unchanged on Thursday as traders await key data points, as well as debt supply on Friday, for further directional signals.
The benchmark 10-year yield IN071034G=CC is likely to move between 6.85% and 6.88%, compared with its previous close of 6.8605%, a trader at a primary dealer said.
“As expected, bonds are expected to continue their sideways movements even today, and volume should remain low, but we may see some action tomorrow and significant moves in the coming week,” the trader said.
US growth data is due after Indian market hours on Thursday, and any signs of weakness would raise bets on a 50 basis point rate cut by the Federal Reserve in September.
That report will be followed by Friday’s personal consumption expenditures data, the Federal Reserve’s preferred gauge of inflation.
Federal Reserve Chairman Jerome Powell last week gave his strongest signal yet that interest rates will be lowered in September.
While a rate cut is certain to happen next month, bets are split between a 25 basis point cut and a 50 basis point cut, with the odds of the latter remaining around 35%. For 2024, markets are looking for cuts of just over 100 basis points. FEDWATCH
Meanwhile, India’s April-June growth data is due out after market hours on Friday, with a Reuters poll expecting gross domestic product (GDP) is believed to have grown by 6.9% annually, compared with 7.8% in the previous quarter, due to lower government spending amid national elections.
The market will also be expecting fresh debt supply as New Delhi is set to sell bonds worth 300 billion rupees ($3.58 billion) on Friday, including the benchmark bond worth 200 billion rupees.
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