Indian sovereign bonds rose, pushing the 10-year yield down from near a six-month high, on speculation funds released by maturing notes will boost demand for existing debt.
Some 361.1 billion rupees ($5.6 billion) of securities matured on Monday, data compiled by Bloomberg show, with another 330.7 billion rupees due for redemption on Sunday.
India’s five-year government notes are attractive to hold from a carry perspective, Deutsche Bank AG wrote in a report dated June 8. The rupee rose.
The yield on the notes due July 2024, the current 10-year benchmark, fell three basis points to 7.97 percent in Mumbai, prices from the central bank’s trading system show. It climbed to a six-month high of 8.01 percent on June 4.
The yield on debt due May 2025, the new 10-year security issued last month, dropped one basis point to 7.79 percent. “With nearly 700 billion rupees of redemptions this week, there should be some replacement demand,” said Soumyajit Niyogi, a Mumbai-based interest-rate analyst at primary dealer SBI DFHI Ltd.
Sentiment is also buoyed by Friday’s onset of the monsoon rains, even though it’s delayed, he said. The Southwest monsoon set in over India’s Kerala state Friday, compared with the normal date of June 1, according to the India Meteorological Department.
The June-September rains are forecast to be 88 percent of a 50-year average this year amid the emergence of an El Nino pattern, which causes drier weather in Asia.
Bonds dropped last week on concern a deficient monsoon will hurt crop output and stoke inflation, preventing the Reserve Bank of India from cutting interest rates further after three reductions this year.
The yield on the 2024 bonds surged 17 basis points in the five days ended June 5, the biggest weekly jump for benchmark 10-year debt since April 2014.
The rupee strengthened 0.3 percent to 63.9250 a dollar, according to prices from local banks compiled by Bloomberg.
bloomberg.com
Some 361.1 billion rupees ($5.6 billion) of securities matured on Monday, data compiled by Bloomberg show, with another 330.7 billion rupees due for redemption on Sunday.
India’s five-year government notes are attractive to hold from a carry perspective, Deutsche Bank AG wrote in a report dated June 8. The rupee rose.
The yield on the notes due July 2024, the current 10-year benchmark, fell three basis points to 7.97 percent in Mumbai, prices from the central bank’s trading system show. It climbed to a six-month high of 8.01 percent on June 4.
The yield on debt due May 2025, the new 10-year security issued last month, dropped one basis point to 7.79 percent. “With nearly 700 billion rupees of redemptions this week, there should be some replacement demand,” said Soumyajit Niyogi, a Mumbai-based interest-rate analyst at primary dealer SBI DFHI Ltd.
Sentiment is also buoyed by Friday’s onset of the monsoon rains, even though it’s delayed, he said. The Southwest monsoon set in over India’s Kerala state Friday, compared with the normal date of June 1, according to the India Meteorological Department.
The June-September rains are forecast to be 88 percent of a 50-year average this year amid the emergence of an El Nino pattern, which causes drier weather in Asia.
Bonds dropped last week on concern a deficient monsoon will hurt crop output and stoke inflation, preventing the Reserve Bank of India from cutting interest rates further after three reductions this year.
The yield on the 2024 bonds surged 17 basis points in the five days ended June 5, the biggest weekly jump for benchmark 10-year debt since April 2014.
The rupee strengthened 0.3 percent to 63.9250 a dollar, according to prices from local banks compiled by Bloomberg.
bloomberg.com
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