India bond yields seen steady, Aug CPI data eyed

India bond yields seen steady, Aug CPI data eyed

Indian government bond yields are likely to trade largely unchanged in early session on Tuesday before an auction of state debt and release of retail inflation data later in the day.

The new 10-year benchmark 7.18% 2033 bond yield is likely to be in a 7.20%-7.22% range on Tuesday after ending the previous session at 7.2135%, a trader with a private bank said.

India’s retail inflation data is due after market hours on Tuesday, while U.S. inflation data is due on Wednesday.

India’s headline retail inflation rate likely eased in August from a 15-month high in July but still hold above the upper end of the Reserve Bank of India’s 2%-6% target range for a second month, a Reuters poll found.

“Domestic inflation may be gradually easing, but monsoon deficiencies are enough to keep food prices elevated,” said Anitha Rangan, an economist at Equirus Group.

While the easing of liquefied petroleum gas prices may help lower inflation in the near term, the rise in crude oil prices leaves limited scope for any fuel price cuts without a fiscal dent, Rangan added.

Meanwhile, the U.S. Treasury yields rose on Monday as investors awaited key inflation data amid fears that interest rates will remain higher for longer.

Even though the U.S. Federal Reserve is not expected to hike rates next week, the odds of a hike in November are nearly 43%.

Brent crude oil futures hovered just above $90 a barrel on Tuesday, as investors awaited a slew of macroeconomic data.