MUMBAI, Dec 31 (Reuters) – Indian government bond yields declined in early deals of the last trading session of 2024 as investors took fresh positions, while a downward tick in U.S. yields aided sentiment.
The benchmark 10-year yield was at 6.7611%, as of 9:45 a.m. IST, compared with its previous close of 6.7731%. The yield was, however, largely unchanged on a monthly and quarterly basis, hovering near the key 6.75% mark.
“Fresh positioning is aiding, because majority view is that yields will move at least 10-15 basis points lower from its current levels in the final quarter of the financial year. Cooling off in Treasury yields is further helping,” a trader with a private bank said.
The 10-year U.S. yield eased from eight-month highs, as investors funneled cash into the bond market following losses in equities.
Still, the yield remained above 4.50% as sentiment was cautious after the Federal Reserve lowered its rate cut forecast for 2025 to 50 basis points from 100 bps. The odds of a pause in January are at 88%, according to CME’s FedWatch Tool.
Traders do not anticipate any large pickup in trading volumes, and they are expected to be tepid, continuing its recent trend.
Daily average trading volume over the last 10 sessions has nearly halved to 371 billion rupees ($4.33 billion) from around 720 billion rupees in the first 10 trading days of December, according to data from the Clearing Corp of India.
Focus would also be on supply as Indian states aim to raise 247.29 billion rupees through sale of bonds later in the day, while traders keenly await the January-March borrowing calendar.
Bond market participants expect states’ borrowings in the final quarter of the financial year to be around 60% higher than October-December, with gross borrowing pegged at around 4 trillion rupees. ($1 = 85.5900 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Varun H K)
