Indian Government Bonds Hold Steady as Market Awaits US Inflation Data

Indian government bonds remained largely unchanged on Wednesday, as market participants awaited key US inflation data scheduled for release later the same day. Traders largely held their positions, expecting the upcoming US economic indicators to provide clearer direction for global fixed-income markets. US consumer price inflation readings are closely watched worldwide because they shape Federal Reserve rate decisions, which in turn influence Treasury yields and the relative attractiveness of emerging-market debt.

India's local retail inflation for July edged up to 4.45 percent, adding to the domestic backdrop for bond markets. The figure remains within the Reserve Bank of India's tolerance band of 2–6 percent but sits above its 4 percent medium-term target, keeping policy expectations in focus. Meanwhile, oil prices posted a slight decline following reports of a ceasefire extension, offering some relief on the inflation front for India, a major crude importer.

Overnight index swap rates in India showed little movement, mirroring the cautious sentiment and reflecting market expectations tied to the forthcoming US economic data.

Axis Bank Raises USD 300 Million via Senior Notes

In a separate development, Axis Bank successfully raised USD 300 million from international investors to support its growth initiatives. The newly issued senior notes carry a coupon rate of 5.348 percent and will be listed on both the India International Exchange (India INX) and NSE IFSC.

The issuance complies with all applicable regulatory requirements, underscoring the private-sector lender's ongoing efforts to diversify its funding base and finance its expansion plans. Dollar-denominated bond issuances by Indian banks have drawn sustained interest from global investors, reflecting appetite for exposure to India's banking sector. Foreign participation in Indian debt has also been supported by India's phased inclusion in the JPMorgan Government Bond Index-Emerging Markets, which began in June 2024 and is expected to track index-linked inflows over a multi-month period.

The broader bond market, however, remained range-bound. Participants indicated that a significant move in yields was unlikely until the US inflation report provided fresh cues on the trajectory of Federal Reserve monetary policy, which has been a key driver of flows into emerging-market debt.

Source: Economic Times Markets