Indian bond yields end lower; local inflation data awaited

Indian government bond yields ended lower on Thursday on expectations of policy easing in China, although the focus was mostly on local inflation data a day after US media downplayed the odds of a big rate cut by the Federal Reserve next week.

The reference point produce closed at 6.8054% compared to a previous close of 6.8271%.

Yields rose earlier in the session after U.S. economic data disappointed bond bulls. However, a report saying China is likely to cut interest rates interest rate on mortgages to boost consumption, raised expectations of similar action by global central banks, dragging down the benchmark lower performance at the end of the session.

India’s retail inflation is due after the market close, with a Reuters poll predicting consumer price inflation of 3.50% in August on a year-on-year basis, little changed from the five-year low of 3.54% in July.

“Headline inflation for the second quarter of fiscal year 2024-25 is likely to willpower not reaching the reserve Bank India’s forecast is 4.4%. The RBI is aware that these lower readings are transitory and will prefer to assess monsoon activity and food prices in the country. supply “The situation is such that action on policy rates is necessary,” STCI Primary Dealer said in a note.

“We expect the RBI to consider a policy rate cut later in the third quarter of fiscal year 2024-25.” Meanwhile, US Treasury yields edged higher on Wednesday after August data showed US consumer prices rose marginally while core inflation remained stable, dampening expectations of a 50-basis-point rate cut by the Fed on September 18. While rate traders have factored in a 25-basis-point cut, the odds of a 50-basis-point rate cut have fallen to 15%, down from over 44% at the start of the week.