Indian government bond yields are expected to open marginally higher in the early session on Monday, tracking a rise in U.S. peers following an uptick in consumer inflation expectations in the world’s largest economy in July. The benchmark 7.26% 2033 bond yield was expected to be in the 7.08%-7.12% range after ending the previous session at 7.0910%, a trader with a private said.
The U.S. yields surged on Friday after a preliminary reading on the overall index of consumer sentiment showed that U.S. consumer sentiment jumped to the highest level in nearly two years in July. Markets will closely watch Federal Reserve Chairman Jerome Powell’s tone at the U.S. central bank’s July 25-26 meeting for further indications on rate action.
“The uncertainty around U.S. and India inflation numbers is over and macros look largely stable now. Therefore, the market’s focus is back to the upcoming supply of state and central government bonds in the coming months,” said Debendra Kumar Dash, senior vice-president, treasury, at AU Small Finance Bank.
“The benchmark yield is expected to move in the range of 7%-7.15% till August, when we will get some clarity on the Reserve Bank of India‘s interest rate trajectory.”