Indian government bonds are set to give up some gains from the previous session in early
deals on Thursday after comments from the United States and Iran
showed that peace was not a done deal for now, keeping Brent
crude above $100 per barrel.
The benchmark Indian 6.48% 2035 bond yield is
expected to drift within the 6.90%-6.95% range, according to a
trader with a private bank, after closing at 6.9219% on
Wednesday.
The yield posted its biggest single-day decline in four
weeks on Wednesday. Bond yields move inversely to prices.
“The continuous back and forth in the U.S.-Iran issue has
been a major pain point rather than the war itself, and we
should see some of the gains getting washed away today,” the
trader said.
Oil prices rose in Asian hours on Thursday after U.S.
President Donald Trump said it was “too soon” for face-to-face
talks with Tehran, while a senior Iranian lawmaker said the U.S.
proposal was more of a wish list than a reality.
The benchmark Brent crude was around $101 per barrel, after
hitting a two-week low on Wednesday.
Iran was reviewing a U.S. peace proposal that sources said
would formally end the war while leaving unresolved the key U.S.
demands that Iran suspend its nuclear program and reopen the
Strait of Hormuz.
Even as a ceasefire prevails, the strait, which carries
about one-fifth of the world’s oil and natural gas supply, has
been mostly shut since the war began on February 28.
Market participants also await the auction of a new 10-year
debt on Friday, with New Delhi looking to raise 340 billion
rupees ($3.59 billion) through this note, which will replace the
existing benchmark paper in the coming weeks.
RATES
India’s overnight index swap (OIS) rates may rise after
heavy receiving interest on Wednesday.
The one-year OIS rate ended at 5.90%,
while the two-year swap rate closed at 6.10%.
The five-year rate settled at 6.4950%, all
down by 14-18 bps.