Bond yields edge up tracking oil move; MPC meet key – Times of India

MUMBAI: Indian government bond yields were trading marginally higher on Monday, as oil prices recovered further, while broader markets waited for domestic monetary policy decision due later in the week.
The benchmark 10-year yield was at 7.2283% as of 10:05 a.m. IST. It had ended up at 7.2215% on Friday, with an eight basis points decline last week.
It’s unlikely that the 7.20% levels will be broken during the day, a trader with a state-run bank said. Market participants may now look to wait for the policy decision before adding more positions, the trader said.
Oil prices gained on Monday, as Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together called OPEC+, held their output targets steady ahead of a European Union ban and a price cap kicking in on Russian crude.
OPEC+ agreed on Sunday to stick to their October plan to cut output by 2 million barrels per day from November through 2023. The benchmark Brent crude contract was trading 1.7% higher at $87 per barrel.
India is one of the largest importers of the commodity and oil prices have a big bearing on nation’s inflation, which eased to 6.77% in October.
The Reserve Bank of India led monetary policy committee is expected to hike rate by a smaller 35 basis points to 6.25% on Wednesday, according to economists polled by Reuters. A strong two-thirds majority said it was still too soon for the central bank to take its eye off inflation.
Bond yields had fallen last week after the US Federal Reserve chairman Jerome Powell signalled that central bank could slow its pace of interest rate hikes in December. The Fed is expected to hike interest rate by 50 basis points on Dec. 14 to 4.25%-4.50% band.
The 10-year US yield rose marginally on Monday and was at 3.53%, after a strong US jobs report for November showed a resilient labour market with rising wages. Nonfarm payrolls increased by 263,000 jobs last month as employees hired more workers than expected, while data for the prior month was revised higher.

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