Bond yields dip amid fall in US peers lower after Fed comments

Bond yields edge lower: Government bond yields fell on Thursday, February 15, mirroring a decline in US Treasury yields, which followed remarks from a Federal Reserve official regarding the timing of potential interest rate cuts.

The benchmark 10-year bond yield was at 7.0872 per cent as of 10:20 am, down from its previous close of 7.1110 per cent.

The decline in US yields on Wednesday came after Chicago Fed President Austan Goolsbee stated that the central bank's path to achieving its 2 per cent inflation target would remain intact even if inflation runs slightly higher than expected in the coming months. Goolsbee also cautioned against waiting too long before implementing rate cuts.

Interest rates unchanged

The Federal Reserve had kept interest rates unchanged last month in the 5.25 per cent to 5.50 per cent target range, a level maintained since July last year.

Meanwhile, the 10-year yield peaked at 4.33 per cent on Wednesday due to a higher-than-expected inflation print, which delayed expectations for rate cuts. The yield was last at 4.23 per cent during Asian trading hours.

Following the Reserve Bank of India's (RBI) hawkish tone at its latest policy meeting, domestic debt market participants have also pushed back their expectations for the start of rate cuts by at least two months, as shown in the overnight index swap market.

Last week, the RBI kept interest rates unchanged at 6.50 per cent and reiterated its commitment to achieving its 4 per cent inflation target.

Traders are now awaiting the last central government debt auction for this financial year, scheduled for Friday, with New Delhi aiming to raise Rs 30,000 crore through the bond sale.

(with Reuters inputs)