India’s 10-Year Sovereign Bonds Extend Drop From Eight-Week High

India’s 10-year government bonds fell for a second day as investors wait for data on inflation and the results of the ongoing national elections.

The yield on the 8.83 percent notes due November 2023 rose two basis points, or 0.02 percentage point, to 8.80 percent in Mumbai, prices from the central bank’s trading system show. The yield climbed four basis points yesterday, the most since April 4, after dropping to an eight-week low of 8.74 percent on May 5.

The Reserve Bank of India will auction 160 billion rupees ($2.7 billion) of debt maturing between 2020 and 2042 on May 9. Industrial output data for March and consumer-inflation figures for April are due on May 12, followed by a report on wholesale prices on May 14. Voting in the world’s largest democracy began April 7 and will end May 12, with results due May 16.

“There is a sense of caution as the coming week is full of crucial events,” said Debendra Kumar Dash, a fixed-income trader at DCB Bank Ltd. in Mumbai. “Yields have seen a swift decline of late and given the constant debt supply, it isn’t going to be easy to sustain at levels below 8.75 percent.”

India’s borrowing costs declined at an auction of 91- and 182-day treasury bills today.

Bonds have rallied in the past month on expectations of a stable government after the polls and as cash injections by the central bank and a strengthening rupee buoyed demand.

One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, fell two basis points to 8.57 percent, according to data compiled by Bloomberg.

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