Indian Bond Trading Drops on Uncertainty Over U.S. Election, Fed

(Bloomberg) -- Trading in India's bonds has dropped more than 40 percent this month as the outcome of the U.S. presidential election becomes too close to call and amid uncertainty about when the Federal Reserve will raise interest rates.

Average volume has fallen to 426 billion rupees ($6.4 billion) in the first two days of November, from 742 billion rupees in October, according to Clearing Corporation of India Ltd. data. Trading slid to a six-week low on Monday. Investors are becoming more jittery as polls show Republican candidate Donald Trump closing on Democrat Hillary Clinton, fueling concern rising volatility will convince the Fed to delay raising rates next month.

“Traders are sitting on the sidelines as they weigh how the U.S. election outcome will impact the markets globally and the Fed decision in December,” said Debendra Kumar Dash, a trader at DCB Bank Ltd. in Mumbai. “Trading volumes are down as no one wants to face losses due to these risk-off events.”

The yield on the 6.97 percent notes due September 2026 was little changed at 6.82 percent in Mumbai, prices from the Reserve Bank of India's trading system show. The yield on benchmark notes has climbed from 6.67 percent on Oct. 5, the lowest close in seven years.

The rupee was little changed at 66.75 per dollar, according to prices from local banks compiled by Bloomberg.

To contact the reporter on this story: Kartik Goyal in Mumbai at kgoyal@bloomberg.net. To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net, Subramaniam Sharma, Karthikeyan Sundaram