Bond Yields: Indian 10-year bond yield awaits triggers to breach 6.85%

Indian Government Benchmark bond yield remained stuck to the 6.85% level on Tuesday amid a lack of strong directional triggers, with market participants on alert US inflation data For more clarity on the size of Federal Reserveinterest rate cut this month.

The benchmark 10-year yield stood at 6.8510% at 10:00 am IST, compared with its previous close of 6.8546%.

“We can safely say that the benchmark bond has become like the local currency and no factor has been able to move it strongly in either direction,” said a trader at a private bank.

US yields were also broadly unchanged, with the 10-year yield holding around the 3.70% level, as the odds of a larger Fed rate cut at the end of its two-day policy meeting on September 18 diminished marginally.

U.S. retail inflation is due after Indian market hours on Wednesday, with the reading expected to come in at 2.6% year-on-year and 0.2% month-on-month, according to a Reuters poll.

Weaker nonfarm payrolls data for August offered no clear signal on the size of an expected rate cut, and even as markets have fully priced in a reduction of at least 25 basis points, expectations for a 50 basis point hike fell to 27% from 31%. Meanwhile, IndiaRetail inflation probably remained below the Reserve Bank of IndiaThe Reserve Bank of India’s (RBI) medium-term target of 4% will be maintained for a second consecutive month in August due to a moderation in food price growth due to last year’s high base, a Reuters poll showed. The data will be released after the market close on Thursday, but even a lower reading may not convince the RBI to change its policy stance immediately.

Seven Indian states will raise 137.9 billion rupees ($1.64 billion) through a bond sale later in the day, with the quantum marginally Higher than expected. ($1 = 83.9640 Indian rupees)