Indian government bond yields were lower in the early session on Thursday following a slump in US peers as weak economic data in the world's largest economy strengthened bets of interest rate cuts. The benchmark 10-year yield was at 6.9934% as of 10:00 a.m. IST, following its previous close at 6.9987%. The downward move in US Treasury yields has led to some positive move in local bonds and the benchmark should remain a tad below the 7% handle for today and tomorrow. Any further decline, however, was unlikely as the market awaited debt supply on Friday, with New Delhi aiming to raise 280 billion rupees ($3.35 billion). The benchmark 10-year US yield fell to 4.35% on Wednesday, as growing signs of weakness in manufacturing and the jobs market suggested the economy was slowing. Despite the Federal Reserve having cut its rate cut forecast to 25 basis points in 2024, investors continued to anticipate 48 bps of cuts with a 67.5% chance of easing in September, according to the CME FedWatch tool. [8f9286a6]
Indian government bond yields ended marginally lower on Friday, with the benchmark 10-year yield at 6.9926%. Foreign inflows have been tepid following the inclusion of Indian debt in JPMorgan's emerging market debt index last week. Possible interest rate cuts from the Reserve Bank of India and U.S. Federal Reserve remain a medium-term trigger for bonds. Investors will closely track the crucial June nonfarm payrolls data for more clarity on the extent and timing of U.S. rate cuts this year. Inflation prints in India and the U.S. next week will provide the next set of directional triggers.