India’s 10-year bonds snapped an eight-day losing streak on speculation yields at a two-week high attracted investors.
The rate on the 8.83 percent debt due November 2023 slipped four basis points, or 0.04 percentage point, to 8.87 percent as of 10:33 a.m. in Mumbai, prices from the central bank’s trading system show. The yield climbed to 8.9 percent yesterday, the highest for a benchmark 10-year note since Nov. 22, amid concern the Federal Reserve will cut monetary stimulus as the world’s largest economy improves.
“There’s been some value buying today as the sell-off seemed to be a bit overdone,” said Debendra Kumar Dash, a fixed-income trader at Development Credit Bank Ltd. in Mumbai. “Bonds have also been aided by the lack of a government auction this week.”
Global funds cut holdings of Indian sovereign debt by more than $14 billion since mid-May on signs the Fed is preparing to pare its $85 billion of monthly bond purchases that have fueled inflows to emerging markets. The tapering will start when policy makers meet Dec. 17-18, according to 34 percent of economists surveyed by Bloomberg Dec. 6, a jump from 17 percent last month.
Fed Bank of St. Louis President James Bullard said yesterday the odds of a reduction in stimulus have climbed along with gains in the labor market. U.S. employers added more workers in November than economists forecast and the jobless rate fell to 7 percent, a five-year low, data showed this month.
The RBI reviews monetary policy on Dec. 18, two days after the government releases wholesale-price inflation figures for November. The central bank raised the repurchase rate by 25 basis points each in September and October, taking it to 7.75 percent, to curb wholesale prices that rose 7 percent year-on-year in October, the fastest pace since February.
The one-year interest-rate swap, a derivative contract used to guard against fluctuations in funding costs, dropped two basis points to 8.48 percent, data compiled by Bloomberg show.
To contact the reporter on this story: Shikhar Balwani in Mumbai at firstname.lastname@example.org