Indian government bonds rose on Monday, tracking firmer U.S. Treasuries, while improved monsoon conditions and strong foreign demand underpinned sentiment.
The U.S. benchmark 10-year yield snapped a four-day rise in Asian trade, ahead of the Federal Reserve's policy meeting minutes, due Wednesday, with traders looking for further cues on the interest-rate path. It was last at 4.4733%.
The benchmark 6.94% 2036 bond yield was at 6.6983%as of 11:20 a.m. IST, down from its previous close of 6.7108%. Bond yields move inversely to prices.
The 10-year yield has slipped below its 200-day moving average of 6.70%, testing the key level for the second time since June 30. A close below that level would signal scope for a longer-term decline, a private-bank trader said.
"Better-than-expected auction cutoffs on Friday, improving monsoon conditions and sustained foreign inflows are all supporting demand," the trader said.
Monsoon prospects have improved, with local media reporting the rainfall deficit has narrowed, citing the India Meteorological Department, easing concerns over food inflation.
Friday's auction of the benchmark 10-year note cleared at 6.7275%, marginally below market expectations, adding to the downward pressure on yields. The benchmark yield fell 6 basis points last week, marking its sixth straight weekly decline.
Separately, overseas inflows under the Fully Accessible Route have stayed strong, with overseas investors net buying more than 346 billion rupees ($3.63 billion) in the last five weeks since June 1.
Oil prices also eased after OPEC+ agreedto further raise output targets.
RATES
India's overnight index swap rates were little changed as traders awaited fresh cues.
The one-year swap rate was at 5.77%, the two-year at 5.91%, and the five-year at 6.18%. ($1 = 95.2100 Indian rupees)
