<p>Central government bond yields ticked up for a second straight session on Thursday as traders remained concerned about a jump in borrowings in the last quarter of the financial year and ahead of a central government debt auction.</p><p>The 10-year bond yield ended at 6.7891 per cent, compared with its previous close of 6.7813 per cent.</p><p>New Delhi will aim to sell bonds worth Rs 320 billion ($3.73 billion) on Friday, including Rs 220 billion of the benchmark paper.</p>.India's 10-year bond yield falls most in four years in 2024 on demand boost.<p>Bond yields have ticked up as the central and state governments are set to raise an aggregate of Rs 7.52 trillion via bond sales between January and March, when the financial year ends. This includes a record 4.73 trillion rupees from states and 2.79 trillion rupees from the central government.</p><p>States will have to pay an additional premium over central government securities to meet their borrowing target as spreads are set to widen, investors said.</p><p>"As of now, we see a spread widening of not more than 5-10 basis points (bps) over government bonds. We see state debt trading between 45 and 50 bps above the 10-year government security," said Aditya Vyas, chief economist at STCI Primary Dealer.</p><p>Meanwhile, market participants will keep an eye on moves in U.S. Treasuries, the Indian rupee as well as demand from foreign investors for government bonds.</p><p>Investors expect foreign inflows into domestic government bonds to be below the record highs set in 2024, while US yields may rise further and the rupee could weaken more as Donald Trump takes over as U.S. president later this month.</p><p>The 10-year US bond yield gained 72 bps in 2024, its fourth consecutive annual rise.</p><p>Investors are also awaiting the start of the domestic rate easing cycle, which could come as early as next month.</p><p>The Federal Reserve, meanwhile, has halved its rate cut forecast to 50 bps for 2025. The odds of a pause in January are at 89 per cent, according to CME's FedWatch Tool.</p>
<p>Central government bond yields ticked up for a second straight session on Thursday as traders remained concerned about a jump in borrowings in the last quarter of the financial year and ahead of a central government debt auction.</p><p>The 10-year bond yield ended at 6.7891 per cent, compared with its previous close of 6.7813 per cent.</p><p>New Delhi will aim to sell bonds worth Rs 320 billion ($3.73 billion) on Friday, including Rs 220 billion of the benchmark paper.</p>.India's 10-year bond yield falls most in four years in 2024 on demand boost.<p>Bond yields have ticked up as the central and state governments are set to raise an aggregate of Rs 7.52 trillion via bond sales between January and March, when the financial year ends. This includes a record 4.73 trillion rupees from states and 2.79 trillion rupees from the central government.</p><p>States will have to pay an additional premium over central government securities to meet their borrowing target as spreads are set to widen, investors said.</p><p>"As of now, we see a spread widening of not more than 5-10 basis points (bps) over government bonds. We see state debt trading between 45 and 50 bps above the 10-year government security," said Aditya Vyas, chief economist at STCI Primary Dealer.</p><p>Meanwhile, market participants will keep an eye on moves in U.S. Treasuries, the Indian rupee as well as demand from foreign investors for government bonds.</p><p>Investors expect foreign inflows into domestic government bonds to be below the record highs set in 2024, while US yields may rise further and the rupee could weaken more as Donald Trump takes over as U.S. president later this month.</p><p>The 10-year US bond yield gained 72 bps in 2024, its fourth consecutive annual rise.</p><p>Investors are also awaiting the start of the domestic rate easing cycle, which could come as early as next month.</p><p>The Federal Reserve, meanwhile, has halved its rate cut forecast to 50 bps for 2025. The odds of a pause in January are at 89 per cent, according to CME's FedWatch Tool.</p>