Fresh debt supply could test Indian bond bulls bruised by elevated oil
TLT•India plans to raise 360 billion rupees ($3.72 billion) through a bond sale, including a 15-year paper, as rising oil prices and a hawkish central bank weigh on bonds. The benchmark 2036 bond yield may trade between 7.25% and 7.30%.
1. Bond supply and yields
Indian government bonds may weaken further on Friday as fresh debt supply adds to selling pressure from rising oil prices and a hawkish central bank. New Delhi plans to raise 360 billion rupees ($3.72 billion), including through a 15-year bond auction. The benchmark 6.94% 2036 bond yield ended Thursday at 7.2868% and may trade in a 7.25%-7.30% range, a primary-dealership trader said.
2. Oil and rate outlook
Brent crude eased marginally from highs after U.S. President Donald Trump said Washington was having productive discussions with Iran, but prices remained set for weekly gains after rising 4% on Thursday. The Reserve Bank of India raised its key rate by 25 basis points to 5.50% on Wednesday and shifted its stance to “calibrated tightening.” It raised its inflation forecast by 20 basis points to 5.2%; most economists expect the terminal repo rate to reach at least 6%.
