Home Debt INDIA BONDS-Indian bond yields seen marginally higher before debt sale -January 24, 2024 at 09:46 pm EST

INDIA BONDS-Indian bond yields seen marginally higher before debt sale -January 24, 2024 at 09:46 pm EST

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MUMBAI, Jan 25 (Reuters) – Indian government bond yields
are expected to be move a tad higher in the early session on
Thursday as traders await a fresh supply of debt through the
central government’s weekly auction.

India’s benchmark 10-year yield is expected
to move in the 7.16%-7.20% range till the debt sale, following
its previous close at 7.1835%, a trader with a primary
dealership said.

“There was some position cutting yesterday and looking at
the way U.S. yields have moved, we could see some selling
pressure in duration today as well, but 7.20% on the benchmark
should be protected,” the trader said.

New Delhi aims to raise 330 billion rupees ($3.97 billion)
through a sale of bonds on Thursday as Indian markets will be
shut on Friday for a public holiday.

The auction includes 160 billion rupees of the benchmark
papers and will take the outstanding issuance to 1.85 trillion
rupees. This will be the last weekly debt sale before the Union
Budget announcement on Feb. 1.

The government is expected to reduce fiscal deficit as a
percentage of GDP to 5.30% from 5.90% in the current financial
year, and will aim for gross borrowing of 15.60 trillion rupees,
up from 15.43 trillion rupees in this fiscal, according to a
Reuters poll.

Meanwhile, U.S. yields continued to move upwards on
Wednesday, with the 10-year yield hovering close to the key
level of 4.20% as investors demanded a higher risk premium after
a strong reading of U.S. business activity before key data later
this week and a Federal Reserve meeting next week.

Strong economic data recently has led to trimming of bets
over the timing as well as pace of Fed rate cuts in 2024.

The odds of the first U.S. rate cut by March have eased to
42% from 56% on Jan. 17, while the probability of a 150 basis
point reduction in 2024 has dropped to 48% from 57%, according
to the CME’s FedWatch Tool.
KEY INDICATORS:
** Brent crude futures 0.2% higher at $80.20 per barrel,
after rising 0.6% in previous session
** 10-year U.S. Treasury yield at 4.1685%, two-year
yield at 4.3757%
** India to sell sovereign bonds worth 330 billion rupees
** RBI to set underwriting fees for 330 billion rupees sovereign
bond auction
** RBI to conduct 15-day variable rate repo auction for 2.50
trillion rupees
($1 = 83.1280 Indian rupees)
(Reporting by Dharamraj Dhutia
Editing by Sonia Cheema)

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