Bond yields steady; food inflation eyed
MUMBAI: Indian federal bonds yields were steady on Thursday amid caution ahead of weekly food and fuel inflation data, due around 0600 GMT, and Friday's bond auction.
Food inflation, which has remained mostly in double digits for the past one year, has been the main driver of headline inflation in Asia's third-largest economy.
India's central bank last month raised interest rates by 25 basis points to clamp down on resurgent inflation, which stood at 8.43 percent in December, and warned of persistently high food prices unless steps are taken to boost supplies.
"How can we expect any big action (price movement) in bonds a day before the auction and food inflation numbers?" said a senior fixed income dealer at a primary dealership.
The government is scheduled to auction 100 billion rupees ($2.2 billion) of bonds on Friday.
At 10:52 a.m. (0522 GMT), the yield on the most-traded 8.08 percent, 2022 was at 8.20 percent, up 1 basis point (bp) from previous close, while the second-most traded 8.13 percent, 2022 bond was steady at 8.17 percent.
The less liquid 10-year benchmark bond yield was at 8.15 percent, steady down 2 bps.
In the overnight indexed swaps, the one-year rate was down 3 bps at 7.37 percent and the benchmark five-year swap was at 7.97 percent, down 2 bps from its previous close.
Food inflation, which has remained mostly in double digits for the past one year, has been the main driver of headline inflation in Asia's third-largest economy.
India's central bank last month raised interest rates by 25 basis points to clamp down on resurgent inflation, which stood at 8.43 percent in December, and warned of persistently high food prices unless steps are taken to boost supplies.
"How can we expect any big action (price movement) in bonds a day before the auction and food inflation numbers?" said a senior fixed income dealer at a primary dealership.
The government is scheduled to auction 100 billion rupees ($2.2 billion) of bonds on Friday.
At 10:52 a.m. (0522 GMT), the yield on the most-traded 8.08 percent, 2022 was at 8.20 percent, up 1 basis point (bp) from previous close, while the second-most traded 8.13 percent, 2022 bond was steady at 8.17 percent.
The less liquid 10-year benchmark bond yield was at 8.15 percent, steady down 2 bps.
In the overnight indexed swaps, the one-year rate was down 3 bps at 7.37 percent and the benchmark five-year swap was at 7.97 percent, down 2 bps from its previous close.
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