Indian 10-year bond yields drop below 7% amid cooling inflation, rate cut hopes

  • US treasury yields were lower after data showed a cooling labour market and price pressures. The 10-year yield hit a more than two-month low.

Ankit Gohel
First Published14 Jun 2024, 11:48 AM IST
Indian bond yields to trade in the range of 6.95% - 7.00% during the day, analysts said.
Indian bond yields to trade in the range of 6.95% - 7.00% during the day, analysts said.

Indian government bond yields extended decline on Friday tracking losses in US Treasury yields on bets of an interest rate cut by the US Federal Reserve in September. India’s benchmark 10-year yield dropped to 6.9779% from its previous close at 6.9872%.

The US treasury yields were lower after data showed a cooling labour market and price pressures. The 10-year yield hit a more than two-month low after the US producer price index for final demand dropped 0.2% in May after advancing 0.5% in April, and below the 0.1% increase forecast by economists polled by Reuters.

Also Read: Treasuries Gain as Mounting Data Point to Softer Inflation, Jobs

A softer-than-expected US retail inflation print has increased bets of an interest rate cut from the Fed this year. The futures market is pricing in 50 basis points of rate cuts this year, according to the CME FedWatch tool, even though the Fed this week slashed its forecast to only one 25 basis point cut in 2024.

“Indian bonds yields have drifted lower this week after the India and US CPI, despite the Fed not being very dovish with the monetary policy tone. Yesterday’s US economic data was dismal and it has indicated slowdown in the Labour market which will keep Indian bond yields subdued but focus remains on today’s gilt auction of 340 billion, as the demand is pretty good in the market,” said an economist with a private bank.

She believes the Indian bond yields to trade in the range of 6.95% - 7.00% during the day.

Also Read: Union Budget 2024 likely on July 22, Economic Survey on July 3, says report

The Indian government plans to raise 34,000 crore ($4.07 billion) through the sale of bonds, which includes a new seven-year paper, on Friday.

India’s consumer price index (CPI) inflation also moderated slightly to 4.75% in May from 4.8% in April.

Meanwhile, India's bond market sentiment has been upbeat as the inclusion of bonds in JPMorgan's emerging market debt index is likely to result in inflows worth between $20 billion and $25 billion into Indian government bonds.

Moreover, investors now look out for the government’s fiscal consolidation path in the upcoming Union Budget.

Catch Stock Market Live Updates here

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess

News in Numbers

Numbers that help you understand news better
$24 M

$13.8 B

₹313 Cr

₹773.44 Cr

34.7 M sqft

250,000

$4.5 B

First Published:14 Jun 2024, 11:48 AM IST
HomeMarketsStock MarketsIndian 10-year bond yields drop below 7% amid cooling inflation, rate cut hopes

Most Active Stocks

Tata Steel

167.05
03:57 PM | 16 JUL 2024
0.25 (0.15%)

Oil & Natural Gas Corporation

322.40
03:58 PM | 16 JUL 2024
-0.15 (-0.05%)

Bandhan Bank

198.30
03:41 PM | 16 JUL 2024
2.95 (1.51%)

Coal India

512.35
03:59 PM | 16 JUL 2024
14.4 (2.89%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Natco Pharma

1,281.05
03:59 PM | 16 JUL 2024
73.2 (6.06%)

Century Textiles & Industries

2,217.55
03:48 PM | 16 JUL 2024
116.85 (5.56%)

Tata Teleservices Maharashtra

81.33
03:54 PM | 16 JUL 2024
4.23 (5.49%)

India Cements

323.05
03:55 PM | 16 JUL 2024
15.8 (5.14%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    74,318.00-453.00
    Chennai
    74,755.00928.00
    Delhi
    75,266.001,294.00
    Kolkata
    75,047.001,002.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.86/L0.00
    Chennai
    100.76/L0.01
    Kolkata
    104.95/L0.00
    New Delhi
    94.72/L0.00
    OPEN IN APP
    HomeMarketsPremiumInstant LoanMint Shorts