Key Takeaways
- Indian government bonds may edge up on Wednesday, supported by steady US Treasury yields and oil prices.
- Markets are bracing for a potential rate hike by the Reserve Bank of India next week.
- The 10-year US Treasury yield was down 2.5 basis points at 5.23% in Asian hours.
Indian government bonds may firm modestly on Wednesday, buoyed by steadier US Treasury yields and oil prices, according to a private bank trader.
The benchmark 6.94% 2036 bond yield may trade in the 7.14% to 7.18% range after ending at 7.1628% on Tuesday.
A sustained break below the key 7.15% level could unleash some buying, the trader added.
The 10-year yield was headed for its biggest monthly rise of the financial year, as oil prices sustained above $100 a barrel, US yields scaled multi-decade highs, and RBI rate hike bets hardened.
Some analysts expect the RBI to raise rates by as much as 100 basis points in 12 months, as elevated global yields and oil prices holding above $100 have dispelled expectations of a shallow tightening cycle.
Traders are bracing for a potential rate hike by the RBI next week, its first since February 2023.
Markets may draw relief from a slight dip in oil prices, with Brent futures trading at $103 a barrel, after easing 2.5% in the previous session.
Brent is still set for a monthly gain of around 14%, its biggest climb since July.
The 10-year US Treasury yield was down 2.5 basis points at 5.23% in Asian hours, inching lower after gaining 27 basis points in six sessions.
Some analysts expect the RBI to raise rates by as much as 100 basis points in 12 months, as elevated global yields and oil prices holding above $100 have dispelled expectations of a shallow tightening cycle.
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