The yield on the existing benchmark 10-year was at 7.0835% as of 10:00 a.m. IST on Tuesday, following its close of 7.0556% on Thursday. The markets were shut on Friday and Monday.
Mutual funds have net sold central government bonds worth 143 billion rupees ($1.72 billion) over the last seven sessions, including a record single-session sale of more than 60 billion rupees on Monday, data showed.
The borrowing cost for states fell to 7.44% in the debt auction, lower than the two-year high of 7.8% in January. This decline is attributed to the interim Union Budget and the fiscal deficit target. Issuance trailing, limited supply, and falling interest rates contributed to the decrease. The weighted average tenor increased, while the spread between cut-off rates declined.
India is one of the largest importers of the commodity. Inflation eased to 6.83% in August from 7.44% in July but remained above the central bank s target band for second consecutive month.
Bond yields have eased in the last few sessions, tracking their U.S. peers and moves in the overnight indexed swap (OIS) rates. U.S. yields and Indian swaps fell on rising speculation that the Fed s rate hike on July 26 would be its last in the current tightening cycle. The 10-year U.S. yield was around 3.75%, while the five-year OIS was at 6.21%.