Bond Yields Up For Sixth Straight Day, Tracking US Peers

The government bond yields rose for a sixth consecutive session on Thursday, as traders scaled down positions due to higher US Treasury yields.

The benchmark 10-year government bond yield ended at 7.2929%. The yield has risen 11 basis points in the last five sessions. It had ended at 7.2858% on Wednesday. The new 10-year 7.26% 2032 bond yield ended at 7.2773% after closing at 7.2727% on Wednesday.

The 10-year US Treasury yield hit its highest level in nearly two months on Wednesday, as investors lightened positions ahead of the US Federal Reserve's annual Jackson Hole conference, where Fed Chair Jerome Powell is scheduled to speak on Friday.

Interest rate futures imply over a 60% chance of a 75 basis point Fed hike in September, up from 50% earlier this week.

Rate hikes by major central banks have led to expectation of a similar move from the Reserve Bank of India that has been tightening rates to bring down stubbornly high inflation.

Meanwhile, rising global oil prices added to inflation anxieties, traders said.

"Oil is already above $100 per barrel and 10-year US yield has risen above 3.10%, and both these factors are likely to increase selling pressure on central government bonds," said Venkatakrishnan Srinivasan, founder and managing partner at debt advisory firm Rockfort Fincap.

The benchmark Brent contract was hovering around its highest level in three weeks after Saudi Arabia suggested the Organization of the Petroleum Exporting Countries could consider cutting output.

India is a major importer of crude oil and domestic inflationary pressures are expected to intensify. India's consumer inflation has stayed above 6% for seven straight months.

Traders await further cues from fresh debt supply due on Friday and key economic growth data next week.

State Bank of India expects growth at 15.7% on-year, while Barclays expects the reading at 16%.