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India bond yields remain steady ahead of JPMorgan’s index inclusion | News on Markets

Indian government bond yields ended steady on Tuesday, ahead of the notes being added to JPMorgan’s widely-tracked emerging market debt index.


The benchmark 10-year yield ended at 6.9858 per cent, following its previous close of 6.9741 per cent.


Inflows into bonds under the so-called fully accessible route, which permits unfettered inflows, have risen to more than $10 billion since the index inclusion was announced in September. Indian bonds will be added to the global index on Friday.


“In view of the lower market borrowings (by the government) and India’s inclusion in JP Morgan’s Government Bond Index-Emerging Markets, the 10-year G-sec yields are expected to decline to 6.8 per cent mark at end-FY25,” said Sunil Kumar Sinha, senior director and principal economist at India Ratings.


Investors tracking the index are bullish on India and had allocated 3.6 per cent of holdings to the country’s bonds as on end-May, Morgan Stanley said.


Foreign banks have also stepped up purchases of bonds, especially those of longer maturities, and the market expects hefty flows by the end of the week.


Meanwhile, US Treasury yields were largely unchanged on Monday as investors awaited data to assess whether a recent weakening in economic activity will continue, which would strengthen the case for a first interest rate cut by the Federal Reserve.

US bond yields have declined this month as price pressures have eased and data across different sectors of the economy, including the labour market, have started to show moderation.


Traders in futures tied to the Fed’s policy rate were assigning a 61.2 per cent chance to a first 25 basis point rate cut in September, LSEG data showed on Tuesday, with a total of nearly two rate cuts priced for this year.

First Published: Jun 25 2024 | 8:04 PM IST

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