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Informist, Wednesday, Oct. 30, 2024

MUMBAI – On Thursday, government bonds and overnight indexed swap rates may take cues from the movement in US Treasury yields after the release of jobs and GDP data after Indian market hours. The movement in crude oil prices, and developments in the West Asia conflict, may also lend cues. 

US data, released after market hours, presented mixed cues on the pace of US rate cuts. ADP private sector jobs report for October showed that jobs grew by 233,000, over double the market consensus estimate. However, US GDP grew 2.8% in Jul-Sept, according to the government's advance estimate, below the consensus 3.1% view compiled by Dow Jones.

US personal consumption expenditure data and the US October employment report is also due this week. These data points will be watched closely ahead of the US FOMC meeting from Nov. 6-7.

Trade volume in money markets may remain muted on Thursday. While markets are shut on Friday for Diwali, the celebration in many parts of the country is on Thursday and several traders are on leave during the festival season.

On Thursday, the four-day call money rate may open around the Reserve Bank of India's repo rate of 6.50% because of the demand for funds from banks in early trade for reserve requirements.

GOVERNMENT BONDS

Gilts may take cues from the overnight movement in US yields after mixed economic data released after Indian market hours. Until the US Presidential election on Tuesday, traders are not expected to pick up gilts in sizeable quantities, and will look at any indication of the election result for cues, dealers said. 

The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.79-6.86%, while that on the 6.79%, 2034 bond is seen at 6.76-6.83% on Thursday. On Wednesday, 7.10%, 2034 bond closed at INR 101.87, or 6.83% yield, and the 6.79%, 2034 bond ended at INR 99.96, or 6.78% yield.

OIS RATES

On Thursday, OIS rates may take cues from US yields. Further cues on the outcome of the US elections on Tuesday will be eyed, dealers said.

The swap rate in the one-year segment is seen at 6.45-6.62% and in the five-year segment at 6.12-6.30%. On Wednesday, the one-year swap rate closed at 6.52% and the five-year swap closed at 6.27%. 

CALL

On Thursday, the four-day call money rate may open around the RBI's repo rate of 6.50% because of the demand for funds from banks in early trade for reserve requirements. Financial markets in India will be closed on Friday on account of Diwali.

During the day, the call rate is seen in a range of 6.00-6.75%, dealers said. On Wednesday, the one-day call rate ended at 5.80%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net outflows of INR 29.51 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 87.00 billion on 91-day Treasury bills

--INR 90.84 billion on 364-day Treasury bills

--INR 384.00 million as coupon on state bonds

--INR 200.73 billion as redemption on 13-day variable rate reverse repo

--INR 355.25 billion as redemption on overnight variable rate reverse repo

* Outflows

--INR 78.50 billion as payment on 91-day T-bills

--INR 62.44 billion as payment on 182-day T-bills

--INR 66.80 billion as payment on 364-day T-bills

--INR 250.05 billion as reversal of 6-day variable rate repo tender 

End

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

Reported by Cassandra Carvalho

Edited by Deepshikha Bhardwaj

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