Indian bond yields flat as traders seek directional cues Indian government bond yields were flat in the early session on Wednesday, as traders pause purchases to assess the outlook on yields and look out for fresh triggers for further directional moves. The benchmark 7.26% 2033 bond yield was trading at 7.0704% as of 10:00 a.m. IST after ending the previous session at 7.0566%. “At 7.05%-7.06% levels for the benchmark, most would not be entering major longs, as all positives seem to be factored in, and hence we may be in for a couple of days of sideways trading,” a trader with a state-run bank said. Bond yields have been easing recently, tracking sharp receiving in overnight indexed swap (OIS) rates amid strengthening bets of the U.S. Federal Reserve pausing its rate hike cycle after July. The next major trigger would be the Fed policy decision due on July 26, where markets will focus on the guidance provided by Chair Jerome Powell, with a 25 bps rate hike already factored in. The odds of a 25 bps hike in July remain around 92%, but that of another hike after that have come down sharply. Back home, traders await treasury bill supply, with the central bank selling notes worth 240 billion rupees ($2.92 billion) later in the day. New Delhi will also raise 310 billion rupees through the sale of bonds on Friday, which includes 140 billion rupees of a new 14-year bond, with traders expecting cutoff yield in the 7.13%-7.18% range.
However, that doesn’t take into account the fact that geopolitical tensions on the Middle East are undeniably rising again which will mean limited downside.”
In the U.S., oil drilling rigs were up by one at 501 last week, Baker Hughes said in its weekly report.JPMorgan forecasted 26 oil rigs to be added this year, most of them in the Permian during the first half of the year.
“The timing of drilling is paramount, as rig additions at the start of the year will contribute to 2H24 production growth,” the bank’s analysts said in a note.
“Despite an impressive 1 mbd of crude and condensate production growth in 2023, we expect 2024 supply to increase by only 400 kbd due to lower completions activity levels vs 2023.”