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Informist, Wednesday, Nov. 6, 2024

MUMBAI – Government bonds and overnight indexed swap rates on Thursday will take cues from the movement in US Treasury yields following the Republican party's sweep in the US elections, dealers said. The US Federal Open Market Committee meeting outcome, due at 0030 IST on Friday, will also be eyed. 

The panel was widely expected to cut interest rates by 25 bps, but commentary from US Federal Reserve Chair Jerome Powell may lend cues. In addition, traders may take cues from developments on the conflict in West Asia.

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

GOVERNMENT BONDS

On Thursday, prices of government bonds will take cues from the movement of US Treasury yields in the US market following the Republican sweep in the election that was expected to go down to the wire, dealers said.

Traders will also be watchful ahead of the outcome of the FOMC meeting. Since a rate cut was discounted, there may be limited caution ahead of the outcome, dealers said.

The yield on the 10-year benchmark, 7.10%, 2034 bond is seen at 6.80-6.88%, while that on the 6.79%, 2034 bond is seen at 6.76-6.83% on Thursday. On Wednesday, the 7.10%, 2034 bond closed at INR 101.83, or 6.83% yield, and the 6.79%, 2034 bond ended at INR 99.96, or 6.79% yield.

OIS RATES

Swap rates will take cues from the movement of US Treasury yields. The US FOMC outcome will also be eyed. The committee is widely expected to cut interest rates by 25 bps, which is already discounted by the market.

The swap rate in the one-year segment is seen at 6.45-6.65% and in the five-year segment at 6.25-6.42%. On Wednesday, the one-year swap rate closed at 6.54% and the five-year swap closed at 6.32%. 

CALL

One-day call money rate may open near the RBI's repo rate of 6.50% because of the demand for funds from banks to meet the reserve requirements. During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. On Wednesday, the one-day call rate ended at 6.35%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 265.37 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 170.00 billion on redemption of 91-day Treasury bills

--INR 84.23 billion on redemption of 182-day T-bills

--INR 92.55 billion on redemption of 364-day T-bills

--INR 113.87 billion on redemption of floating rate bond 2024

--INR 21.24 billion as coupon on state bonds

--INR 2.95 billion as coupon on floating rate bond 2024

--INR 740.00 billion on redemption of 3-day variable rate reverse repo

--INR 708.25 billion on redemption of 2-day variable rate reverse repo

--INR 282.65 billion on redemption of overnight variable rate reverse repo

* Outflows

--INR 83.00 billion payment of 91-day T-bills

--INR 70.00 billion payment of 182-day T-bills

--INR 66.46 billion payment of 364-day T-bills

End

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

Reported by Srijita Bose

Edited by Saji George Titus

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