India 10-year bond yield down on likely short covering -traders

By Dharamraj Lalit Dhutia

MUMBAI, Aug 10 (Reuters) - Indian benchmark bond yield eases as traders look at covering short positions ahead of key U.S. retail inflation data due later on Wednesday, traders said. ** India's 10-year benchmark bond yield was at 7.3186% at 0723GMT, after rising to day's high of 7.3517% earlier in the session. It had ended at 7.3485% on Monday. ** The 10-year bond yield had jumped 19 basis points in last two sessions, after the Reserve Bank of India hiked repo rate by 50 basis points and highlighted elevated inflation concerns. ** "It seems some traders are covering their short positions ahead of U.S. inflation data, which will impact U.S. yields and local bonds could also rally if inflation beats estimates," a trader with a state-run bank said. ** Economists expect year-on-year headline inflation USCPNY=ECI running at 8.7%, a small retreat from June's 9.1% figure, while core inflation is expected at 0.5% month-on-month USCPF=ECI ** Bond market traders also await result of 210-billion rupee ($2.64 billion) Treasury bill auction and are on lookout for local retail inflation data due on Friday.

($1 = 79.4930 Indian rupees)
Reporting by Dharamraj Lalit Dhutia Editing by Neha Arora

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