Indian government bond yields are expected to remain largely unchanged in the opening session on Friday as market participants await the Reserve Bank of India’s monetary policy decision and commentary for further cues.
The 10-year benchmark 7.18% 2033 bond yield is likely to be in the 7.19%-7.23% range till the monetary policy decision after ending at 7.2140% in the previous session, a trader with a private bank said.
The central bank is seen holding the key interest rate steady at 6.50% on Friday, with the focus remaining on the inflation trajectory, as well as the liquidity outlook.
The RBI in August had asked lenders to maintain an incremental cash reserve ratio of 10% on the increase in some deposits and since then the liquidity has moved on the tighter side with rates rising.
While this move has been eased out in phases since September, it has pushed effective rates higher.
“The I-CRR was an indirect rate hike as the RBI had been looking to keep overnight rates closer to the MSF (marginal standing facility) rate,” said Arun Bansal, executive director and head of treasury at IDBI Bank.
Meanwhile, U.S. yields remained steady after a sharp spike was witnessed in the last few days as traders await non-farm payroll data due later in the day.
The 10-year U.S. yield was around 4.70% after witnessing a constant rise and hitting an over 16-year high of 4.88% on Wednesday amid bets of higher-for-longer interest rates.
The benchmark Brent crude contract eased below $85 per barrel, after threatening to cross the $100 per barrel key psychological level last week amid supply crunch.