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India bond yields rise, tracking moves in U.S. Treasuries

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MUMBAI — Indian government bond yields were higher on Thursday, tracking a consistent spike in U.S. Treasury yields, while high oil prices stoked inflation fears.

The benchmark 10-year government bond yield was at 7.2998% as of 0500 GMT. The yield has risen 11 basis points in the last five sessions. It had ended at 7.2858% on Wednesday. The new 10-year 7.26% 2032 bond yield was at 7.2798% after closing at 7.2727% on Wednesday.

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“Bonds are reacting to developments globally and both oil prices and U.S. yields have now turned against bullish bets,” a trader with a state-run bank said.

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Some buying from state-run banks was offering support to bond prices, traders said.

The 10-year U.S. Treasury yield hit its highest level in nearly two months on Wednesday, as investors lightened positions ahead of the U.S. Federal Reserve’s annual Jackson Hole conference, where Fed Chair Jerome Powell is scheduled to speak on Friday.

Interest rate futures imply over a 60% chance of a 75 basis point Fed hike in September, up from 50% earlier this week. The Fed has raised rates by 225 basis points since March, which includes back-to-back 75 bps rate hikes in June and July.

Meanwhile, the benchmark Brent contract was hovering around its highest level in three weeks after Saudi Arabia suggested the Organization of the Petroleum Exporting Countries could consider cutting output.

India is a major importer of crude oil and domestic inflationary pressures are expected to get aggravated. India’s consumer inflation has stayed stubbornly above 6% for seven straight months.

Traders also await fresh debt supply due on Friday and the critical economic growth data due next week.

State Bank of India expects growth at 15.7% on-year, while Barclays expects the reading at 16%. (Reporting by Dharamraj Lalit Dhutia; Editing by Neha Arora)


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