INDIA BONDS-India bond yields end week lower after big Fed rate cut

By Bhakti Tambe

MUMBAI, Sept 20 (Reuters) - Indian government bond yields rose marginally on Friday but ended lower for the week, after the U.S. Federal Reserve delivered a super-sized interest rate cut, boosting investor sentiment.

The benchmark 10-year yield ended at 6.7626%, compared to its previous close of 6.7577%, as traders booked profits after the recent sharp fall.

The yield declined nearly three basis points (bps) this week, after falling 6 bps in the previous week.

"The exuberance of the market participants was toned down, given that the 'dot plot' is not showing aggressive rate cuts until December 2024," Axis Asset Management said in a note.

The U.S. central bank kicked off its interest rate cut cycle with a larger-than-usual 50 bps reduction on Wednesday. Policymakers projected another 50 bps of cuts in 2024 and 100 bps in 2025, according to an updated dot plot.

However, futures markets are pricing a more aggressive easing of nearly 75 bps over the Fed's next two policy meetings in November and December.

India's central bank may consider changing stance or cutting rates in October-December given recent global easing, such as Indonesia's surprising rate cut and the Fed's move, Axis Asset Management said.

Market participants will look out for U.S. jobless claims and personal consumption expenditure price index reports next week for further cues on the Fed's policy trajectory.

Local bond traders will also await the borrowing calendar for the second half of the financial year, due next week. India is expected to borrow 14.01 trillion rupees via the sale of bonds this year.

Earlier in the day, New Delhi raised 310 billion rupees via sale of bonds at a weekly auction, which also included the 10-year benchmark bonds. (Reporting by Bhakti Tambe; Editing by Varun H K)