Indian bond yields may track US peers lower
By Dharamraj Dhutia
MUMBAI, Sept 5 (Reuters) -Indian government bond yields are expected to open marginally lower on Thursday, as U.S. Treasury yields declined further after labour market data bolstered the casefor a larger rate cut from the Federal Reserve later in the month.
The benchmark 10-year yield IN071034G=CC is likely to move between 6.84% and 6.87%, compared with its previous close of 6.8579%, a trader with a private bank said.
"Though there is not much juice left in the benchmark bond yield, as any major move below 6.85% is unlikely to be seen, we could see bulls becoming active againtoday," the trader said.
U.S. Treasury yields fell on Wednesday, with interest rate sensitive two-year yields hitting a 15-month low, after data showed U.S. job openings dropped to over three-year low in July.
The closely watched yield curve between two-year and 10-year notes also briefly turned positivefor the second time in a monthindicating widening expectations of interest rate cuts.
The data comes after weaker manufacturing print and ahead of the crucial U.S. non-farm payrolls data due on Friday, which most believe would be the final trigger to move the needle in favour of a 25 or 50-basis-point move.
Markets are fully pricing in a rate cut of at least 25 bps at the Fed's meeting this month, with expectations for a 50 bps cut rising to 45% from 30% earlier this week. FEDWATCH
Back home, New Delhi will sell bonds worth 290 billion rupees ($3.45 billion) on Friday, which includes liquid 15-year note.
ICICI Prudential Life Insurance plans to raise investments in longer-duration federal government bonds, including the 10-year benchmark, as the demand-supply outlook is "quite favourable", Ketan Parikh, head of fixed income investments said on Wednesday.
KEY INDICATORS:
** Brent crude futures LCOc1 were 0.4% up at $73.00 per barrel, after falling 1.4% in previous session
** Ten-year U.S. Treasury yield US10YT=RR at 3.7647%, two-year yield US2YT=RR at 3.7683%
($1 = 83.9630 Indian rupees)
Reporting by Dharamraj Dhutia
Editing by Eileen Soreng
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