India bond yields push higher following selloff in US Treasuries
By Nimesh Vora
MUMBAI, Oct 22 (Reuters) -Indian government bonds yields nudged higher on Tuesday, after a slew of factors pushed the 10-year U.S. Treasury yield to its highest in 12 weeks overnight.
The benchmark 10-year bond yield IN071034G=CC was at 6.8356% at 10:30 a.m. IST, up one basis point from its previous close. The yield had risen to 6.8507% just after open, its highest in two weeks.
It "is expected" that near to 6.85%, "there will be buying interest", a trader at a bank said.
Still, it's "difficult to have much conviction right now with what is happening to U.S. yields and after RBI Governor's comments," the trader said.
The 10-year U.S. Treasury yield US10YT=RR rose to a 12-week high on Monday. US/
A more optimistic outlook for the U.S. economy after resilient data, expectations for the potential of stickier inflation, concerns around a larger fiscal deficit and technical factors propelled U.S. yields higher, Morgan Stanley said in a note.
The U.S. Federal Reserve almost certainly will be delivering a smaller rate cut in November than at its September meeting, further impacting demand on U.S. Treasuries, according to traders.
Aside from U.S. yields, Reserve Bank of India Governor Shaktikanta Das' comments last Friday that it would be "very premature" and risky to lower interest rates at this stage have also soured sentiment.
The comments indicate that a December rate cut, which a few economists thought was possible, may not materialize.
Meanwhile, five Indian states will raise sharply lower-than-expected 81 billion rupees ($963.41 million) via sale of bonds on Tuesday.
Reporting by Nimesh Vora; Editing by Varun H K
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