Now Reading: Oil price jitters restrain Indian bonds ahead of inflation data
-
01
Oil price jitters restrain Indian bonds ahead of inflation data
Oil price jitters restrain Indian bonds ahead of inflation data
Indian government bond yields stayed narrowly range-bound on Wednesday as elevated oil prices curbed risk appetite ahead of US and domestic inflation data. The benchmark 10-year yield was little changed at 6.78%.…
The Story in Brief
Indian government bond yields stayed narrowly range-bound on Wednesday as elevated oil prices curbed risk appetite ahead of US and domestic inflation data. The benchmark 10-year yield was little changed at 6.78%. Brent crude rose 0.8% to $89.6 a barrel after climbing 6.5% in the previous two sessions. Costlier crude threatens Indian bonds by stoking inflation and straining the oil-importing economy.India's July retail inflation print is due at 4 pm IST. A Reuters poll forecasts 4.50%, up from 4.38% in June. US July inflation data is also due later today. Expectations of further RBI rate hikes have eased since the central bank left rates unchanged last week. A hotter US reading could boost Fed rate hike bets, narrowing India's yield premium over US bonds. RBI's diaspora deposit scheme has brought in over $36.7 billion as of July 17, pushing India's daily average cash surplus to over Rs 3 trillion in August.
The Indian Opinion
The market narrative that oil alone will spike inflation and force RBI's hand is too simplistic. Global crude jumped, yes, but India's $36.7 billion diaspora inflows and RBI's cash surplus of over Rs 3 trillion are powerful counterweights. If July CPI comes in well above 4.50%, the 6.80% yield ceiling will be tested. If it is softer, the real test is whether the 6.76% floor holds.
Sources (2): thehindubusinessline.com, hindustantimes.com
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
