Indian government bonds advanced in early Wednesday trading, driven by a softer-than-expected inflation print in the United States that reduced the likelihood of an immediate interest rate hike by the Federal Reserve.
The benchmark 6.94% 2036 bond yield dropped to 6.7703% by 10:40 am local time, reversing a recent upward trend.
7945% in the previous session, reflecting prior market anxiety over persistent inflationary pressures in the world's largest economy.
The instrument had closed at a three-week high of 6.7945% in the previous session, reflecting prior market anxiety over persistent inflationary pressures in the world's largest economy.
The shift in US data has recalibrated expectations for Federal Reserve policy, with traders now pricing in a more dovish stance.
This development follows a similar market reaction to a softer-than-expected June jobs report, which previously tempered expectations for further rate hikes and supported gains in US equity markets.
The repricing of US rate expectations is flowing through to emerging market debt, where lower US yields typically support bond prices.