INDIAN BONDS – India’s benchmark yield falls below key level as US peers fall – 11/15/2023

Indian government bond yields fell in early trading on Wednesday, with yields on benchmark bonds falling to their lowest level in six weeks, following a decline in benchmark US bonds as it became increasingly likely the Federal Reserve would not raise interest rates. .

The yield on the benchmark 10-year bond was 7.2313% at 10:00 after ending the previous session at 7.2828%. Earlier today, the yield fell to 7.2262%, the lowest since October 6. Indian markets are closed this Tuesday.

“Bond yields have adjusted lower in US yields and the benchmark may now trade in a tight range for the day, with further directional moves in Treasuries being the main trigger,” said a trader at a bank government.

US bond yields collapsed after weaker-than-expected consumer inflation raised hopes that interest rate hikes are over, as markets expect rate cuts to begin in the first half of 2024.

US consumer prices remained unchanged in October as Americans paid less for gasoline, the smallest annual increase in two years. In the 12 months to October, the CPI rose 3.2% after rising 3.7% in September.

Economists polled by Reuters had expected the CPI to rise 0.1% in the month and 3.3% in the year.

The yield on the 10-year US Treasury fell nearly 20 basis points on Tuesday and was at 4.43%, its lowest level since September 22, as the probability of a rate cut in March increased to 31% and in May to 65%.

India’s retail inflation fell to 4.87% in October from 5.02% in the previous month, close to the central bank’s target of 4%. A Reuters poll of 53 economists forecast interest rates at 4.80%.

Kotak Mahindra Bank expects the central bank to suspend the repo rate until the next fiscal year. (Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)

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