The Indian government bond yields edged towards a significant low on Monday as the benchmark bond yield hovered around 7%, a level not seen in nine months.

 This movement was driven by declining U.S. yields, amidst expectations of a rate cut in June by the Federal Reserve.

 The benchmark 10-year yield was recorded at 7.0093% at 10:00 a.m. IST, slightly lower than its previous close of 7.0312%. Earlier in the day, it touched 7.0071%, the lowest since June 14, 2023. 

Traders are actively engaging in strong purchases in anticipation of breaking the 7% mark for the Indian 10-year bond, with the 10-year U.S. yield close to 4% instead of 4.20%. 

The U.S. bond yields dropped to a five-week low following strong job growth in February, leading to expectations of rate cuts by the Fed later this year.

 Fed Chair Jerome Powell’s remarks further solidified these expectations, with a 75% probability of a rate cut in June.

 Inflation data releases for both India and the U.S. in February will also be closely monitored by traders, setting the stage for policy decisions. India’s inflation is predicted to have decreased to 5.02% in February.

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