By Dharamraj Dhutia
MUMBAI, April 6 (Reuters) – Indian government bond yields are expected to be little changed in the early session on Thursday, as market participants await the Reserve Bank of India’s monetary policy decision and commentary.
The 10-year benchmark 7.26% 2032 bond yield IN072632G=CC is expected to be in the 7.26 to 7.30% range till the policy decision, after closing at 7.2750% on Wednesday. India’s financial markets will remain shut on Friday.
More than the rate action, commentary from the RBI would be the market-moving trigger, a trader said. “If there is a clear hint that rates would be on prolonged pause after today, we may see some more rally.”
The RBI is widely expected to raise its benchmark rate on Thursday for the seventh consecutive meeting and leave the door open for more increases to bring inflation back within its target range, economists said.
A large majority of economists, 49 of 62, said the central bank would lift its repo rate by 25 basis points to a seven-year high of 6.75%.
Easing U.S. yields have led to similar moves in local bonds, with the 10-year U.S. yield easing to around 3.30% on Thursday as U.S. job openings in February dropped to the lowest level in nearly two years, implying labour market is finally cooling.
Meanwhile, traders will also await the first government debt auction of the current financial year, which will see New Delhi borrowing a record 15.43 trillion rupees ($188.25 billion).
The government will raise 330 billion rupees via sale of bonds later in the day which includes a new five-year bond as well as 7.26% 2033 bond which will replace the existing benchmark note soon.
KEY INDICATORS:
** Brent crude futures LCOc1 contract was down 0.6% at $84.45 per barrel after staying little changed in the previous session
** 10-year U.S. Treasury yield US10YT=RR was at 3.2997% and two-year note US2YT=RR was at 3.7716% ** RBI’s Monetary Policy Committee to announce interest rate decision
** India to sell sovereign bonds worth 330 billion rupees
** RBI to set underwriting fees for 330 billion rupees of sovereign bond auction
($1 = 81.9670 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Varun H K)
((Dharamraj.dhutia@tr.com))
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