India bonds to edge up on steady US yields, oil prices

Business Recorder reported that Indian government bonds were set to firm modestly on Wednesday, supported by a steadier tone in US Treasuries and crude. Investors were also looking for signals on the Reserve Bank of India's rate path as expectations for further US rate hikes eased. The benchmark 6.94% 2036 bond had closed at 7.1628% on Tuesday.

A private bank trader projected the benchmark yield in a range of 7.14% to 7.18%, adding that a sustained break below 7.15% could attract buying. The 10-year yield was on course for its largest monthly rise of the fiscal year, as Brent stayed above $100 a barrel, US yields reached multi-decade highs and bets on an RBI rate increase firmed. Brent futures were quoted at $103 following a 2.5% decline the day before, yet the commodity remains on track for a monthly gain of around 14%.

A trader at a primary dealership cited analysts who see the RBI lifting rates by up to 100 basis points over 12 months. A possible RBI rate increase is on traders' radar for next week, which would mark the central bank's first since February 2023. In the US, the 10-year Treasury yield eased 2.5 bps to 5.23% in Asian hours after climbing 27 basis points over six sessions, while New York Fed President John Williams said policymakers probably need just one more rate increase this year.