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Informist, Tuesday, Oct. 15, 2024

NEW DELHI – Government bond prices and overnight indexed swap rates may be sensitive to the overnight movement in US Treasury yields and crude oil prices early on Wednesday, dealers said. Volatility may be limited amid a lack of scheduled domestic cues.

Remarks scheduled later Tuesday by three Federal Reserve officials – Adriana Kugler, Raphael Bostic and Mary Daly – may lend cues to traders' views on the US rate-cut trajectory, dealers said. US retail sales data for September and weekly unemployment claims data, due post market hours Thursday, may also impact US yields. Developments in the conflict in West Asia are also being closely watched.

On Wednesday, the one-day call money rate may open near the Reserve Bank of India's repo rate of 6.50% because of demand for funds from banks to meet reserve requirements.

GOVERNMENT BONDS

On Wednesday, bonds are seen opening higher as dealers expect a further fall in crude prices, dealers said. Traders will also look at the overnight movement of US yields.

Fully accessible route gilts may see foreign fund inflows due to their ongoing inclusion on J.P. Morgan's emerging market bond index since June. Any uptick in gilt 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 6.75-6.83% on Wednesday. On Tuesday, the gilt closed at INR 102.29, or 6.77% yield.

OIS RATES

OIS rates are seen opening steady Wednesday due to a lack of significant domestic interest rate cues, dealers said. Offshore cues may be keenly tracked.

The swap rate in the one-year segment is seen at 6.40-6.55% and in the five-year segment at 6.05-6.25%. On Tuesday, the one-year swap rate ended at 6.47% and the five-year swap rate closed at 6.15%. 

CALL

On Wednesday, the one-day call money rate may open near the Reserve Bank of India's repo rate of 6.50% because of demand for funds from banks to meet reserve requirements. During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. On Tuesday, the one-day call rate ended at 5.75%.

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 70 billion

--RBI to auction 182-day T-bills worth INR 60 billion

--RBI to auction 364-day T-bills worth INR 60 billion

LIQUIDITY

--Total net inflows of INR 35.56 billion. Calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and reverse repo.

* Inflows
--INR 3.18 billion as coupon on state bonds

--INR 140.50 billion as redemption of state bonds

* Outflows

--INR 130.50 billion as redemption of state bonds

End

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

Reported by Aaryan Khanna

Edited by Tanima Banerjee

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