Indian bonds extend rally ahead of inflation data
TLT•Indian government bonds extended their rally, with the benchmark 2036 bond yield settling at 7.1529%, nearly 4 basis points lower. Hopes for a US–Iran peace deal pushed oil prices down ahead of US and Indian inflation data due this week.
1. Bond yields fall
Indian government bonds surged on Monday, extending last week’s rally as lower oil prices and improved sentiment lifted demand ahead of inflation data. The benchmark 6.94% 2036 bond yield settled at 7.1529%, nearly 4 basis points below Friday’s close; the market will be closed Tuesday for a local holiday.
2. Inflation and rates
The benchmark yield fell 22 basis points last week, its sharpest weekly drop in nearly seven years. Brent crude fell 3.6% to $94.60 a barrel on Monday after dropping more than 16% last week. India’s October consumer inflation reading, due Thursday, is forecast at 5.93%, up from 5.54% in September and near the upper end of the Reserve Bank of India’s 2%-6% tolerance band. The one-year overnight indexed swap rate fell 5.25 basis points to 6.28%, while the two-year rate dropped 4.5 basis points to 6.3% and the five-year rate slid 8.5 basis points to 6.3950%.
