Government Securities (G-Secs) yields thawed on Thursday, tracking substantial decline in the US Treasury yields, with yield of the benchmark 10-year paper closing below 7 per cent.
Unexpected drop in inflation in May triggered the drop in US Treasury yields even the US Fed held rates steady, dropping hints it may go in for only one rate cut in 2024 instead of three forecast earlier.
Yield of the 1he 10-year benchmark G-Sec (7.10 per cent 2034 GS) softened 3 basis points to end at 6.99 per cent against previous close of 7.02 per cent. Price of this security was up about 21 paise, ending at ₹100.7775.
“10Y benchmark (7.10 GS 2034) opened lower at 6.98 per cent, tracking a sharp fall in treasury yields overnight (following euphoria around softer US CPI inflation).
“Yields were ranged for the rest of the day in absence of fresh cues, with uncertainty around FOMC meeting outcome over,” Nuvama said in a report.
Sharp moves in India yields were limited on hawkishly received FOMC outcome, wherein the committee revised its dot-plot lower – indicating one rate cut this year, it added.
Marzban Irani, CIO-Fixed Income, LIC Mutual Fund, said: “India’s macroeconomic indicators are in a sweet spot. The 10-year benchmark paper is expected to trade in the 6.95-7.10 per cent range.”