Indian government bond yields are likely to be largely unchanged in early session on Tuesday, with traders taking cues from demand at the last state debt auction of the quarter. The benchmark 7.26% 2033 bond yield is expected to be in the 7.04%-7.08% range, after closing at 7.0654% in the previous session, a trader with a primary dealership said.
Twelve Indian states aim to raise 224.50 billion rupees ($2.74 billion) through the sale of bonds maturing in seven years to 30 years.The quantum is marginally lower than scheduled, but four times of what states raised last week. This will be followed by the central government’s debt sale on Friday, where it aims to raise 330 billion rupees.
In June, the Reserve Bank of India kept its key lending rate steady for a second straight meeting, but signalled monetary conditions will remain tight for some time as it looks to attain the 4% inflation target.
Kotak Mahindra Bank said that with increasing uncertainty on the monsoon front, risks to food inflation are skewed to the upside, and it expects the benchmark yield to trade in 7.00%-7.15% in the near term. Earlier this month, the U.S. Federal Reserve kept interest rates unchanged but warned of a half-percentage point hike in 2023, while Fed Chair Jerome Powell suggested rates could go higher. The odds of a rate hike in July stand at around 74%.