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Informist, Tuesday, Jul 23, 2024

MUMBAI – Government bond prices and overnight indexed swaps are seen opening steady on Wednesday as the market may lack significant cues after the Union Budget for 2024-25 (Apr-Mar), dealers said.

The market will watch out for key economic data from the US for further guidance on rate cuts there. It will assess the US GDP advance estimates for Apr-Jun, scheduled to be released on Thursday. Gilts and swaps are likely to take cues from the speech of various US Federal Reserve officials, scheduled to speak later this week.

Any sharp movement in the US Treasury yields and crude oil prices may also lend cues at the opening.

Meanwhile, the one-day call money rate may open near the RBI's repo rate of 6.50% because of the demand for funds from banks in early trade.

GOVERNMENT BONDS

Bond prices are seen opening steady as the market may lack significant cues after the Budget, dealers said. During the day, traders are likely to trim bond holdings ahead of the weekly auction on Friday, which has a huge fresh supply with the government selling three dated securities worth 350 bln rupees, dealers said.

Traders will now shift their focus to data from the US, due this week. The market may also take cues from the comments of various US Federal Reserve officials who are lined up to speak in the week, dealers said.

Dallas Fed President Lorie Logan and Federal Reserve Board Governor Michelle Bowman will speak at an event today. On Thursday, US Apr-Jun GDP is scheduled to be released, while personal income and outlays for June are due on Friday.

The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.93-7.02% during the day. Today, the bond closed at 100.90 rupees, or 6.97% yield.

OIS RATES

Swap rates are seen opening steady on lack of firm domestic cues. The market will watch out for key economic data from the US for further guidance on rate cuts there. The market will assess the US GPD advance estimates for Apr-Jun, scheduled to be released on Thursday.

Swaps are also likely to take cues from the speech of various US Federal Reserve officials, who are scheduled to speak later this week.

The swap rate in the one-year segment is seen at 6.65-6.80% and in the five-year segment at 6.27-6.42%. Today, the one-year swap rate settled at 6.72% and the five-year swap ended at 6.28%.

CALL

The one-day call money rate may open near the RBI's repo rate of 6.50% because of the demand for funds from banks in early trade. During the day, the call rate is seen in a range of 6.20-6.80%, dealers said. Today, the one-day call rate ended at 6.50%.

RBI AUCTION

--RBI to auction 91-day T-bills worth 80 bln rupees

--RBI to auction 182-day T-bills worth 60 bln rupees

--RBI to auction 364-day T-bills worth 60 bln rupees

LIQUIDITY

--Total net outflows of 39.04 bln rupees. Calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and reverse repos.

* Inflows

--61.75 bln rupees as coupon on 7.18%, 2037 bond 

--15.21 bln rupees as coupon on state government securities

--5.00 bln rupees as redemption of state government securities

* Outflows

--121.00 bln rupees as payment on state government securities 

End

Reported by Nishat Anjum

Edited by Deepshikha Bhardwaj

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