India 10-Year Bond Yield Reaches Two-Week High Before Price Data

India’s 10-year bonds dropped for a second day, pushing the yield to its highest level in almost two weeks, before a report forecast to show inflation topped 9 percent for a 23rd consecutive month.

Consumer prices rose 9.2 percent in January, compared with 9.87 percent in December, according to a Bloomberg survey before data due today. That would still be the fastest pace in Asia. Monthly inflation averaged 10.06 percent in 2013 and was last below 9 percent in February 2012.

“Even if we see some softening in inflation, the number is still pretty high and discomforting,” said K. Ramanathan, chief investment officer at ING Investment Management Pvt. in Mumbai. “Bonds are expected to stay range-bound.”

The yield on the 8.83 percent sovereign notes due November 2023 rose seven basis points, or 0.07 percentage point, to 8.81 percent in Mumbai, according to the central bank’s trading system. That’s the highest level since Jan. 30.

Reserve Bank of India Governor Raghuram Rajan, who raised the benchmark repurchase rate to 8 percent from 7.75 percent on Jan. 28, said in the policy statement that more increases are unlikely in the “near term” should inflation cool as expected.

Gains in wholesale prices probably slowed to 5.65 percent in January from a year earlier, after rising 6.16 percent in December, a Bloomberg survey shows before a government report due Feb. 14. Industrial production probably fell for a third month in December, contracting 1.2 percent from a year earlier, according to the median of 40 estimates in another Bloomberg survey before data due today.

One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, rose two basis points to 8.70 percent, data compiled by Bloomberg show.

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