By IndiaHub 
The yield on the 6.79% government bond maturing in 2034 was at 6.2696% as of 10:30 a.m. IST, compared with the previous close of 6.2742%.
The yield on the new 10-year benchmark 6.33% bond maturing in 2035 was at 6.2246%, versus its previous close of 6.2302%.
Yields move inversely to bond prices.
The yield on the 10-year U.S. Treasury fell 10 basis points from Wednesday’s high of 4.52%, as key data showed signs of a sluggish U.S. economy, boosting bets that the Federal Reserve will cut interest rates at least twice this year.
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India’s debt sale, due later in the day, is expected to see strong demand, traders said. “We might see some further downward move, but mostly the yield on the old 10-year will trade in the range of 6.25% to 6.26% in the day,” a trader at a primary dealership said. “Overall, the environment bodes well for the bulls.”
India’s banking system liquidity surplus rose to 2.22 trillion rupees ($25.9 billion) on Thursday, the highest level in nearly 7 weeks, after the central bank’s debt purchase.
Investors are piling on wagers for a further rally in bonds as they anticipate a large dividend payout by the central bank to the government near month-end.
RATES
India’s overnight index swap (OIS) rates dropped in early trades due to a high receiving bias on easing U.S. Treasury yields.
The one-year OIS rate was down 1 basis point at 5.62%, the two-year OIS rate was lower by 1 basis point at 5.50%, and the most liquid five-year OIS rate fell 2 basis points to 5.65%.
($1 = 85.6775 Indian rupees).