India Money Market Outlook
Gilts, swaps to take cues Mon from global factors
This story was originally published at 18:51 IST on 16 November 2024
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NEW DELHI – On Monday, government bonds and overnight indexed swap rates will take cues from US Federal Reserve Chair Jerome Powell's remarks on the US economy in Dallas. Market participants will keep a close watch on movement in US Treasury yields, and crude oil prices.
In addition to weekly unemployment claims data released late Thursday, US retail sales data for October may also lend cues to the market. While the 10-year benchmark 7.10%, 2034 bond is likely to be at 6.82-6.90% on Monday, the one-year swap rate is projected at 6.54-6.60% and the five-year is seen at 6.30-6.36%.
The call money rate is expected to hover near the RBI's repo rate of 6.50% early in the day due to banks meeting reserve requirements. It is likely to range between 6.00-6.75% throughout the day, according to dealers.
GOVERNMENT BONDS
On Monday, prices of government bonds will take cues on movement in US yields after a series of cues over the long weekend, dealers said. Both weekly unemployment claims data, and US retail sales for October released over the weekend may influence the opening level. Fed Chair Powell's remarks in Dallas may lend cues on the interest rate trajectory in the world's largest economy.
The movement of crude oil prices may also affect gilts. On Monday, the government will switch INR 200 billion worth of eight bonds with seven gilts at 1030-1130 IST.
The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.82-6.90% on Monday. The yield on the 6.79%, 2034 bond is seen at 6.79-6.86%.
OIS RATES
On Monday, OIS rates are seen taking cues from Powell's speech in Dallas and US retail sales data for October released on Friday.
The movement of US Treasury yields and crude oil prices will also be closely watched, dealers said. The swap rate in the one-year segment is seen at 6.54-6.60% and in the five-year segment at 6.30-6.36%.
CALL
On Monday, the one-day call money rate may be near the RBI's repo rate of 6.50% due to early demand for funds from banks to meet reserve requirements. During the day, the call rate is seen in a range of 6.00-6.75%, dealers said.
RBI AUCTION
--RBI to hold INR 1 trillion, 4-day variable rate reverse repo Monday
--Govt to switch eight gilts worth INR 200 billion via auction Monday
LIQUIDITY
--Total net outflows of INR 361.07 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 3.38 billion on coupon on state bonds on Sunday
--INR 5.55 billion on coupon on state bonds on Monday
* Outflows
--INR 370.00 billion as payment for gilts on Monday
Reported by Krity Ambey
Edited by Tanima Banerjee
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