India bond yields flat before US jobs data, 10-year yield crawls up

Indian government bond yields were largely unchanged in early deals on Friday, as market participants awaited U.S. economic data to gauge the Federal Reserve's interest rate trajectory, which could also have a bearing on the domestic rate cycle.

While yields on most bonds were flat, that on the 10-year benchmark bond rose slightly after the Reserve Bank of India did not include the note in next week's bond purchase.

The 10-year yield was at 6.6902% as of 9:45 a.m. IST, compared with its previous close of 6.6806%.


The U.S. nonfarm payroll data for February is due after Indian market hours. Nonfarm payrolls likely increased by 160,000 after rising 143,000 in January, a Reuters survey of economists showed.

The data would provide some clarity on how the Fed will progress in its monetary easing path.

Interest rate futures project the Fed will cut rates by 75 basis points in 2025, as concerns over the health of the world's largest economy have risen. The Fed cut rates by 100 bps in 2024.

Indian central bank purchases would be the key trigger for a decline in yields, traders had said.

The RBI is set to buy bonds worth 500 billion rupees ($5.74 billion) each on March 12 and March 18, followed by a $10 billion three-year dollar/rupee swap on March 24.

These operations underscore its intention to keep banking system liquidity in a surplus, which should help banks pass on policy rate cuts to consumers, analysts said.

The RBI has infused more than 4.5 trillion rupees into the banking system since mid-January. ($1 = 87.1690 Indian rupees)