India bonds may open steady after relief rally from near 7.50% levels

Indian sovereign debt was expected to begin Wednesday with limited movement after buyers returned late in the prior session, Business Recorder reported. The yield on the 6.94% 2036 government bond ended Tuesday at 7.4360%, and a dealer saw it trading in a 7.42% to 7.48% range. The 10-year yield fell four basis points, its sharpest daily drop in three months, after repeated attempts to push beyond 7.50% failed.

Investors were also watching for the US Federal Reserve’s policy announcement, due after Indian trading, with attention on its signals about future rates despite expectations of a pause. Brent crude held near $115 a barrel, close to a six-month peak amid Middle East shipping disruption. India imports nearly 90% of its crude, and sustained high oil prices could affect its inflation, currency and public finances; markets are pricing in almost 125 bps of Indian rate increases over the next 12 months.