Money Market Heads Up – India’s Bonds are Set to Rise

MasterMind Update (MMU) – Money Market Heads Up – India’s bonds are set to rise when the market reopens following a five-day break after the central bank allowed banks to spread out their debt-trading losses over as long as four quarters.

Investors will also focus this week on the Reserve Bank of India’s policy decision Thursday and the government’s first debt sale for the fiscal year that started April 1.

India’s benchmark 10-year sovereign bonds complete their first monthly advance since July in March. Bulk of those gains came in one day, after the government said it will sell less debt than the market expected in the first half of the fiscal year starting April 1.

The 10-year yield finished at 7.40 percent on Wednesday, having dropped 33 basis points in March.

Meanwhile, forwards suggest the onshore spot will start trading around 65.0698. It ended at 65.17 on Wednesday with bunched up inflows likely to help the rupee on Tuesday.