INDIA BONDS — Indian bonds may decline at open as spike in oil dampens sentiment
By Dharamraj Dhutia MUMBAI, Oct 14 (Reuters) — Indian government bonds may decline in opening trades on Wednesday, as traders trim holdings followinga fresh spike in oil prices and before US inflation data due after market hours. The benchmark 6.94% 2036 bond yield may trade between 7.35% and 7.40%, according to a trader with a primary dealership, after closing at 7.3655% on Tuesday. Bond yields rise when prices fall. "There should be some reversal from yesterday's value-purchase driven moves, but 7.40% on the upside will hold," the trader said. Oil prices climbed in Asian hours, as traders weighed supply risk from the fight between Yemen's Iran-allied Houthis and Saudi Arabia against the prospect of increased diesel from Russia. The benchmark Brent crude contract moved above $107 per barrel. Elevated energy prices have a big bearing on oil import-dependent India, pinchingthrough inflation, the rupee as well as government finances. Later in the day the United States' inflation data would provide the latest indication of the Federal Reserve's interest rate trajectory, after the Fed raised rates last month. The odds of another hike in October stand at 23%, while pricing on a similar
By Dharamraj Dhutia MUMBAI, Oct 14 (Reuters) — Indian government bonds may decline in opening trades on Wednesday, as traders trim holdings followinga fresh spike in oil prices and before US inflation data due after market hours. 3655% on Tuesday. Bond yields rise when prices fall. 40% on the upside will hold," the trader said.
Oil prices climbed in Asian hours, as traders weighed supply risk from the fight between Yemen's Iran-allied Houthis and Saudi Arabia against the prospect of increased diesel from Russia. The benchmark Brent crude contract moved above $107 per barrel. Elevated energy prices have a big bearing on oil import-dependent India, pinchingthrough inflation, the rupee as well as government finances. Later in the day the United States' inflation data would provide the latest indication of the Federal Reserve's interest rate trajectory, after the Fed raised rates last month.
The odds of another hike in October stand at 23%, while pricing on a similar move at the December meeting spikes to 88%. 54%, set to cross the central bank's upper tolerance band in October, according to a majority of economists. RBI Governor Sanjay Malhotra in a media interview on Tuesday said the central bank does not generally use monetary policy to safeguard financial stability, but the two cannot be entirely separated. Rates India's overnight indexed swap (OIS) rates are expected to rise after witnessing declines on Tuesday.
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