India's key-tenor bonds may see relief after October-March supply cut

Business Recorder reported that Indian bond yields were set to open higher on Monday as US yields climbed. A smaller planned supply of liquid 5-year and 10-year paper from October to March could provide some support after a sharp selloff in recent weeks. A trader at a primary dealership expected the benchmark 6.94% 2036 bond to trade in a range of 7.06% to 7.11%, having closed Friday at 7.1194%.

New Delhi plans to borrow 7.86 trillion rupees ($82 billion) through bonds from October to March, slightly below earlier estimates. That brings the full-year total down to 16 trillion rupees from 16.09 trillion after the first half and 17.20 trillion in the budget. The share of 5-year bonds in the borrowing mix has fallen to 12.1%, while 10-year paper accounts for 26.3%, versus 15.4% and 29% in April to September.

The 10-year benchmark yield has risen 36 basis points in six weeks, with the shorter-tenor bond up 46 basis points. US Treasury yields stay close to a near two-decade high after recent data and Fed comments fed expectations of further hikes. Traders assign a 64% chance to another hike in October, according to CME Group's FedWatch Tool. Most now expect the Reserve Bank of India to raise rates next week, after August retail inflation reached 4.82%.