The yield on the benchmark 6.94% 2036 paper dropped five basis points to 7.3902%, marking its steepest single-day decline since July. Debt markets found relief as Brent crude dipped to $113.70 per barrel and the 10-year U.S. Treasury yield eased to 5.00%. In derivative markets, longer-maturity overnight indexed swap rates tracked the global rally, even as shorter tenors were constrained by tight liquidity. Traders are now awaiting an upcoming 330 billion rupee sovereign bond auction to determine whether the buying momentum will hold.
Key points
Less hawkish commentary from the Federal Reserve has reduced expectations for additional…: Less hawkish commentary from the Federal Reserve has reduced expectations for additional aggressive U.S. monetary policy tightening.
Slower tightening by the Federal Reserve provides the Reserve Bank of India room to adjus…: Slower tightening by the Federal Reserve provides the Reserve Bank of India room to adjust the pace of its rate hikes.
Investor attention is shifting to Friday's 330 billion rupee government bond auction to g…: Investor attention is shifting to Friday's 330 billion rupee government bond auction to gauge sustained market demand.
Sources checked by our analysis pipeline: 1
The yield on the benchmark 6.94% 2036 bond dropped 5 basis points to 7.3902%, its biggest fall since July. Bond prices rise when yields fall.
The move gathered pace after the 10-year US Treasury yield slid 4.5 basis points to 5.00% in Asian hours, easing the global borrowing-cost backdrop. Meanwhile, Brent crude fell 1.3% to $113.70 a barrel on hopes of peace talks.
Yields on India's battered government bonds may be approaching territory that more investors consider a "buy", with that on the benchmark 10-year approaching 7.50%, a level not seen in four years.
Yields on India's battered government bonds may be approaching territory seen as a buying opportunity, investors said.
The Federal Reserve's less hawkish pause also helped the market. The Fed left rates unchanged on Wednesday, as expected, and chair Kevin Warsh's remarks were viewed as less hawkish than feared, leading markets to pare expectations for further US tightening.
"It was certainly less hawkish and gives breather space for the RBI also to pace out the rate hikes," said Kruti Chheta, Mumbai-based fund manager at Mirae Asset Mutual…
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