Indian bond yields seen steady as traders eye fresh triggers
Indian government bond yields are expected to move sideways on Thursday, as traders and investors await a supply of local debt and a key U.S. inflation print, both due on Friday.
The benchmark 10-year yield (IN071833G=CC) is likely to trade in a 7.16%-7.20% range, following its previous close at 7.1852%, a trader with a primary dealership said.
"We saw some reversal in bond yields yesterday, as upside risks to both oil as well as Treasury yields still persist, but for today, we could see thin-range trades being the theme," the trader said.
Bond yields declined in the first two days of the week, before giving up some of the fall on Wednesday, as oil prices and U.S. yields continued to be around levels where a further upside is possible.
Oil prices eased slightly as concerns about a potential slowdown in the U.S. amid prospects for delayed interest rate cuts have outweighed worries over the risk of expanding conflict in the Middle East.
However, the benchmark Brent crude contract continues to remain around $87 per barrel. Elevated crude prices could impact India's retail inflation as the nation is one of the largest importers of the commodity.
U.S. Treasury yields moved higher, with the 10-year yield around 4.65%, as traders waited on key economic releases on Thursday and Friday for further clues on Federal Reserve policy.
The data will come after a hotter-than-expected inflation reading for March pushed back expectations of rate cuts.
Investors are now pricing in the possibility of around 42 basis points (bps) of rate cuts by the Fed by end of this year, according to CME's FedWatch Tool.
New Delhi will sell bonds worth 320 billion rupees ($3.84 billion) on Friday, which includes 200 billion rupees of the 7.10% 2034 paper.
KEY INDICATORS:
** Brent crude futures 
BRN1! 0.1% lower at $87.95 per barrel, after easing 0.5% in the previous session
** Ten-year U.S. Treasury yield 
US10Y at 4.6479%, two-year yield (US2YT=RR) at 4.9373%
($1 = 83.3260 Indian rupees)