India bond yields rise ahead of US, India inflation data
2024-12-11
Category: economic

    Indian government bond yields ended marginally higher on Wednesday, as traders awaited the inflation data from the world's largest economy and India for further cues on interest rates.
The benchmark 10-year yield (IN067934G=CC) ended at 6.7171%, compared with its previous close of 6.7073%.
U.S. consumer price index (CPI) data is due after Indian market hours on Wednesday, with a Reuters poll predicting inflation likely rose 2.7% year-on-year and 0.3% month-on-month in November.
        The 10-year U.S. yield climbed overnight and was around 4.23% in Asia hours, while the odds of a 25-basis-point rate cut are currently at 85% compared to 72% last week. The Federal Reserve, whose policy decision is due next Wednesday, has already cut rates by 75 bps since September. (FEDWATCH)
India data is due on Thursday, with a Reuters poll predicting retail inflation likely slowed to 5.53% in November from 6.21% in October as the arrival of fresh produce to markets moderated soaring vegetable prices.
Underlying sentiment remained supported as bets rose that the Reserve Bank of India will cut interest rates after India appointed Sanjay Malhotra as its new central bank governor, effective Wednesday.
Most brokerages now anticipate the RBI will start its monetary policy easing cycle with a 25 bps rate cut in February.
"The new governor has tough choices to make when stagflation is knocking on the door of the domestic economy," said Alok Sharma, head of treasury at ICBC.
"Though the transition is expected to be smooth, difficult choices lie ahead related to a smaller window available for rate cuts, mounting FX pressures and a more challenging global landscape." 
Traders also await fresh supply, as New Delhi will raise 370 billion rupees ($4.36 billion) through bond sales, including 220 billion rupees of the benchmark paper, on Friday.
($1 = 84.8400 Indian rupees)