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Informist, Friday, Sep 13, 2024

MUMBAI – Government bond prices and overnight indexed swap rates are seen opening steady on Tuesday, ahead of the US Federal Open Market Committee's meeting that starts later in the day, dealers said.

All eyes will be on FOMC's rate decision on Wednesday, dealers said. Currently, the CME FedWatch tool shows Fed fund futures' expectations of a 50-basis-point rate cut at 43%, against only 28% a day ago, while the remaining priced in a 25-bps rate cut. Any sharp movement in US Treasury yields and crude oil prices may also lend cues at the opening.

During the day, the call rate is seen in a range of 6.20-6.75%, dealers said.

BONDS

Gilts are not traded on Saturday. On Monday, gilts will not be traded as money market will be closed on the occasion of Id-e-Milad. On Tuesday, government bond prices are seen opening steady before the FOMC meeting that starts later in the day.

Eight states will raise 135 bln rupees through bonds on Tuesday, less than half the amount for the week in the indicative calendar for Jul-Sep. Demand is seen firm at the auction, especially as investors stock up on bonds following the cancellation of two T-bill auctions in September.

Foreign fund inflows are likely to continue because of the inclusion of Indian bonds in the JP Morgan Index, a 10-month process that started on Jun 28. Any uptick in yields may also prompt purchases by domestic banks, which will have to maintain larger buffers of liquid assets, such as government securities, due to an impending tightening of the guidelines on liquidity coverage ratio.

The yield on the 10-year benchmark, 7.10%, 2034 bond is seen at 6.75-6.85%. Today, the bond closed at 102.15 rupees, or 6.79% yield.

OIS RATES

Money markets are shut on Saturday, and on Monday for Id-e Milad. Swap rates are seen opening steady on Tuesday, with all eyes on the Federal Open Market Committee's rate decision on Wednesday, dealers said.  

The swap rate in the one-year segment is seen at 6.35-6.53% and in the five-year segment at 5.90-6.10%. Today, the one-year swap rate closed at 6.38% and the five-year at 5.96%.

CALL

Money markets are shut on Saturday, and on Monday for Id-e Milad. On Tuesday, the one-day call money rate may open near the RBI's repo rate due to demand for funds from banks in early trade to meet their reserve requirements. 

During the day, the call rate is seen in a range of 6.20-6.75%, dealers said. Today, the four-day call money rate ended at 6.50%.

RBI AUCTION

--RBI to conduct a three-day variable rate repo auction worth 1 trln rupees

LIQUIDITY

--Total net outflows of 80.75 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

--13.99 bln rupees as coupon on state bonds on Saturday

--14.54 bln rupees on coupon on 7.62%, 2039 gilt on Sunday

--35.37 bln rupees on coupon on 7.19%, 2060 gilt on Sunday

--29.69 bln rupees on coupon on state bonds on Sunday

--39.85 bln rupees on coupon on 6.19%, 2034 gilt on Monday

--35.38 bln rupees on coupon on 6.22%, 2035 gilt on Monday

--9.62 bln rupees as coupon on state bonds on Monday

--50.00 bln rupees as redemption of state bonds on Monday

--38.63 bln rupees on coupon on 6.68%, 2031 gilt on Tuesday

--7.18 bln rupees as coupon on state bonds on Tuesday

* Outflows

--220 bln rupees as payment for gilts on Tuesday

--135 bln rupees as payment on state bonds on Tuesday

End

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

Reported by Srijita Bose and Cassandra Carvalho

Edited by Avishek Dutta

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