Indian bonds rise on RBI easing hopes, 10-year yield break 7 pct mark

The Indian bonds gained Friday as investors speculate that the Reserve Bank of India (RBI) will lower its key interest rate in its October 4 monetary policy meeting.

The yield on the benchmark 10-year bonds, which moves inversely to its price, fell 1-1/2 basis points to 6.960 percent (break 7 percent mark), the super-long 30-year Treasury yield dipped nearly 3 basis points to 7.173 percent and the short-term 2-year note yield slid 2-1/2 basis points to 6.731 percent by 07:00 GMT.

According to Reuters, India's monetary policy committee will decide the policy interest rate at the scheduled October 4 review, and the newly-appointed external members to the panel would be at an arm’s length from the government.

India will raise 140 billion rupees through an auction of four notes, including the new 10-year 6.97 percent 2026 paper that will soon replace the current benchmark bond. This would be the penultimate auction of the first half of this fiscal. India’s central bank and finance ministry officials are due to meet Sep. 29 to decide the borrowing calendar for fiscal second half that begins October 1, Reuters reported.

Meanwhile, the Sensex fell 0.12 percent or 34.94 points to 28,743.97 and Nifty-50 futures traded 0.12 percent lower or 9.20 points at 8,869.50 by 07:10 GMT.