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Informist, Tuesday, Nov. 5, 2024

MUMBAI – On Wednesday, prices of government bonds and overnight indexed swap rates will take cues from the movement of US treasury yields and the voting trend in the US presidential election, dealers said. The movement in crude oil prices may also lend cues to both, dealers said.

Traders await the US Federal Reserve Chair Jerome Powell's commentary at the US Federal Open Market Committee outcome later this week, with any comments on the future trajectory of interest rates after the US election keenly eyed. In addition, traders may take cues from developments in the conflict in West Asia.

On Wednesday, the one-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

On Wednesday, prices of government bonds will take cues on the movement of US treasury yields, dealers said. Traders will likely trade from data on vote counts in the US as they unfold. 

Traders will look for any indication of the election result for cues, including the races for the US Congress, dealers said. Focus will then turn to the US FOMC rate decision later this week.

The yield on the 10-year benchmark, 7.10%, 2034 bond is seen at 6.78-6.88%, while that on the 6.79%, 2034 bond is seen at 6.76-6.84% on Wednesday. On Tuesday, the 7.10%, 2034 bond closed at INR 101.84, or 6.83% yield, and the 6.79%, 2034 bond ended at INR 99.97, or 6.79% yield.

OIS RATES

On Wednesday, the movement of US Treasury yields and the voting trend in the US presidential election may lend cues to swap rates, dealers said. Traders await US Federal Reserve Chair Jerome Powell's commentary at the US Federal Open Market Committee outcome later this week, with any comments on the future trajectory of interest rates after the US election keenly eyed.

A 25-basis-point rate cut by the FOMC has largely been priced in to swap rates, dealers said. Traders did not pay fixed rates ahead of the US election but kept a wary eye on crude oil prices, after Brent crude for January delivery topped $75 a barrel Tuesday.

The swap rate in the one-year segment is seen at 6.50-6.60% and in the five-year segment at 6.25-6.35%. On Tuesday, the one-year swap rate closed at 6.55% and the five-year swap closed at 6.30%. 

CALL

On Wednesday, the one-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. During the day, the call rate is seen in a range of 6.00-6.75%, dealers said. On Tuesday, the one-day call rate ended at 5.95%.

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 70 bln on Wednesday

--RBI to auction 182-day T-bills worth INR 60 bln on Wednesday

--RBI to auction 364-day T-bills worth INR 60 bln on Wednesday

LIQUIDITY

--Total net outflows of INR 58.99 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 32.08 billion as coupon on 7.46%, 2073

--INR 3.60 billion as coupon on state bonds

* Outflows

--INR 94.67 billion as payment on state bonds

End

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

Reported by Srijita Bose

Edited by Vidhi Verma

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