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Informist, Thursday, Aug 8, 2024

MUMBAI – Government bond prices are seen opening steady ahead of the 310-bln-rupee weekly gilt auction on Friday, dealers said. At the auction, the government will sell 200 bln rupees of the 7.10%, 2034 bond and 110 bln rupees of the 7.34%, 2064 bond.

Overnight indexed swap rates may open slightly higher as fears of a US recession and consequent sharp rate cuts eased after jobless claims for the week ended Saturday.

US initial jobless claims fell to 233,000 in the week ended Saturday against 250,000 a week before. According to a poll by Dow Jones, the claims were expected to be 240,000 in the week under question.

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

GOVERNMENT BONDS

On Friday, bond prices are likely to open steady as traders may refrain from placing aggressive bets ahead of the 310-bln-rupee gilt auction, scheduled on Friday. At the auction, the government will sell 200 bln rupees of the 7.10%, 2034 bond and 110 bln rupees of the 7.34%, 2064 bond.

The market may take cues from the US unemployment insurance weekly claims data for the week ended Saturday. Jobless claims rose to 233,000 for the week ended Aug 3 against expectations of 240,000.

Any sharp movement in US Treasury yields and crude oil prices may also lend cues at the opening. The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.80-6.95% during the day. Today, the bond closed at 101.54 rupees, or 6.88% yield.

OIS RATES

On Friday, swap rates may open slightly higher as fears of a US recession and consequent sharp rate cuts eased after jobless claims for the week ended Saturday.

The swap rate in the one-year segment is seen at 6.60-6.80% and in the five-year segment at 6.20-6.35%. Today, the one-year swap rate settled at 6.53% and the five-year swap ended at 6.09%.

CALL

On Friday, the three-day call money rate may open near the RBI's repo rate of 6.50% because of demand for funds from banks in early trade. However, the rates may ease intraday owing to surplus liquidity in the banking system. During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. Today, the one-day call rate ended at 6.75%.

RBI AUCTION

--Govt to auction two gilts worth 310 bln rupees

LIQUIDITY

--Total net inflows of 23.19 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

--23.19 bln rupees as coupon on state bonds

--234.20 bln rupees as reversal of 14-day variable rate reverse repo

--589.60 bln rupees as reversal of 7-day variable rate reverse repo

--789.55 bln rupees as reversal of 4-day variable rate reverse repo

--238.03 bln rupees as reversal of 3-day variable rate reverse repo

* Outflows

--Nil

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Anupreksha Jain

Edited by Tanima Banerjee

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