India bonds extend recovery tracking rise in U.S. Treasuries
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Listen to this article in summarized format The benchmark 6.94% 2036 bond yield fell 3 basis points to 6.7436% by 11:10 a.m. IST, extending its two-day decline to 5 basis points after hitting a three-week high on Tuesday. The yield also traded below its 21-day moving average, a technical level traders said could pave the way for further gains. Indian government bonds saw gains for a second straight session on Thursday. This followed overnight increases in U.S. Treasuries after softer economic data emerged. Softer U.S. inflation data eased concerns about an imminent Federal Reserve rate hike. Lower U.S. yields eased pressure on emerging-market debt, helping Indian bonds recover. State-run lenders and foreign investors actively bought bonds, adding support. The 10-year U.S. Treasury yield fell overnight to 4.55% after U.S. producer prices unexpectedly declined 0.3% last month, against expectations for no change, following a soft inflation reading. The data prompted investors to pare Fed rate-hike bets, with futures pricing almost no chance of a July increase and a 51% probability in September, down from 25% and 75%, respectively. Lower U.S. yields eased pressure on emerging-market debt, helping Indian bonds recover. Brent crude fell below $85 a barrel despite fresh Gulf tensions and Strait of Hormuz supply disruptions, easing concerns over imported inflation. Several economists have also scaled back domestic rate-hike calls as inflation expectations eased. "By our estimates, July inflation is tracking lower at 4.0% year on year, from 4.4% in June..for FY27, we forecast inflation at 4.6%, the current account deficit at 1.2% of GDP and an extended RBI hold," Nomura wrote in a note. Flows added support State-run lenders bought 156 billion rupees ($1.62 billion) of bonds over the last three sessions. Foreign investors also stayed active, buying more than $4.2 billion of Fully Accessible Route bonds since June 1 on expectations India will be included in Bloomberg's Global Aggregate Index. RATES India's overnight index swaps eased in line with U.S. yields. The 1-year was down 3.5 bps at 5.8975%, while the 2-year rate fell 6 bps to 6.06%. The 5-year rate was down 5.25 bps at 6.3275%. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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