Bond yields seen inching up tracking oil move; MPC meet key
By Dharamraj Dhutia
MUMBAI, Dec 5 (Reuters) - Indian government bond yields are expected to open marginally higher on Monday, as oil prices recover further, while broad market awaits domestic monetary policy decision due later in the week.
The benchmark 10-year yield IN072632G=CC is likely to move in a 7.20%-7.25% band, a trader with a private bank said. The yield ended at 7.2215% on Friday, with an eight basis points decline last week.
As it was evident from Friday's moves, traders showed their discomfort below 7.20% for the benchmark, and we may see some more uptick as oil has corrected since last week's levels, the trader said.
Oil prices gained on Monday, as Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together called OPEC+ have held their output targets steady ahead of a European Union ban and a price cap kicking in on Russian crude.
OPEC+ agreed on Sunday to stick to their October plan to cut output by 2 million barrels per day from November through 2023. The benchmark Brent crude contract was trading 1.7% higher at $87 per barrel.
India is one of the largest importers of the commodity and oil prices have a bearing on nation's inflation, which eased to 6.77% in October.
The Reserve Bank of India led Monetary Policy Committee is expected to hike rate by a smaller 35 basis points to 6.25% on Wednesday, according to economists polled by Reuters. A strong two-thirds majority said it was still too soon for the central bank to take its eye off inflation.
Bond yields had fallen last week after the U.S. Federal Reserve Chairman Jerome Powell signalled that central bank could slow its pace of interest rate hikes in December. The Fed is expected to hike interest rate by 50 basis points on Dec. 14 to 4.25%-4.50% band. KEY INDICATORS: ** Brent crude futures LCOc1 up 1.7% to $87.15 per barrel, after easing 1.5% in the previous session ** 10-year U.S. Treasury yield US10YT=RR was at 3.5317% and the two-year note US2YT=RR at 4.3110%
Reporting by Dharamraj Dhutia; Editing by Dhanya Ann Thoppil
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.