Indian 10-year yield below 7% again as US peers decline

Indian government bond yields eased for a second straight session on Wednesday, with the benchmark bond yield back to below 7%, as U.S. yields dropped from their recent highs.

The 10-year benchmark 7.26% 2033 bond yield was at 6.9917% as of 10:00 a.m. IST, after closing at 7.0102% in the previous session.

“The reversal in U.S. yields has calmed nerves, pushing the 10-year below 7% again, but for the day we should not see any major moves,” a trader with a primary dealership said.

U.S. yields declined across the curve as a deal to raise the U.S. debt ceiling and avoid potential default reassured investors.

The two-year yield, considered to be a closer indicator of interest rate expectations, and the 10-year yield have moved around 15 basis points (bps) lower from their recent highs. They were last at 4.45% and 3.68% respectively.

The odds of another 25-bps hike by the Federal Reserve on June 14 stand eased slightly to 58%, after rising to as high as 72% recently, indicating that the hiking cycle may not have ended.

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