Indian government bond yields are likely to be unchanged in early session on Wednesday, ahead of a markets holiday and as the first quarter of the financial year nears its end. The benchmark 7.26% 2033 bond yield is expected to be in the 7.04%-7.08% range, after closing at 7.0611% in the previous session, a trader with a primary dealership said.
“Like the previous two days, we are in for another range-bound trading session and traders are now eyeing the next quarter,” the trader said. Indian markets will remain shut on Thursday for Eid. The financial quarter will end on June 30.
In June, the RBI 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 hit its target of inflation at 4%. 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%.
The spread between the two-year and 10-year U.S. yield stays around 100 basis points, with the shorter end, which is a closer indicator of interest rate expectations, remaining elevated. Traders bracing for debt supply on Friday as New Delhi will raise 330 billion rupees ($4.02 billion) through the sale of bonds, which includes the benchmark note.