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Informist, Wednesday, Sep 25, 2024

MUMBAI – Government bond prices and overnight swap rates may open steady on Thursday, dealers said. The gilts market awaits the release of the government borrowing calendar for Oct-Mar, expected on Thursday after market hours, as per two finance ministry officials aware of the matter. 

The dealers said that any cut in borrowing may cause a rise in gilt prices. Both swaps and gilts market will watch out for US data, such as personal consumption expenditure and inflation numbers due later this week. Any sharp movement in US Treasury yields and crude oil prices may also lend cues when the markets open.

On Thursday, the one-day call money rate may open near the Reserve Bank of India's repo rate due to demand for funds from banks early in the day to meet the reserve requirements.

BONDS

On Thursday, gilts may open steady ahead of the expected release of the borrowing calendar for dated securities for Oct-Mar, dealers said. The calendars for the quarterly issuance of state bonds and Treasury bills are also awaited this week.

The market's focus is likely to be on supply, despite some significant data points in the US. The US personal consumption expenditure data, which is the Fed's preferred inflation gauge, for August may lend cues on interest rates, dealers said.

Any uptick in yields may also prompt purchases by domestic banks, which are gearing up to meet the regulatory requirement of maintaining larger buffers of liquid assets, such as government securities, from the financial year starting Apr 1, 2025. 

The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.70-6.78% on Thursday. Today, the benchmark paper closed at 102.53 rupees, or 6.74% yield.

OIS RATES

OIS rates may open steady Thursday due to lack of fresh cues on interest rates, dealers said. The US inflation data is awaited later this week for further clarity on the US rate cut trajectory.

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 6.37% and the five-year at 5.99%.

CALL

On Thursday, the one-day call money rate may open near the RBI's repo rate due to demand for funds from banks early in the day to meet the reserve requirements. During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. Today, the one-day call money rate ended at 5.75%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of 214.58 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

--60.00 bln rupees as redemption on 91-day Treasury bills

--150.00 bln rupees as redemption on 182-day T-bills

--4.58 bln rupees as coupon of state bonds

* Outflows

--500.03 bln rupees as reversal of two-day variable rate repo tender

End

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

Reported by Srijita Bose and Cassandra Carvalho

Edited by Tanima Banerje

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