India Money Market Outlook
Gilts, swaps to take cues from US yields on Tue
This story was originally published at 21:23 IST on 25 November 2024
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MUMBAI – Government bond prices and overnight indexed swap rates may take cues from the overnight movement in the US Treasury yields and crude oil prices on Tuesday, dealers said. India's GDP data for Jul-Sept, due at 1600 IST Friday, has been in focus as the next domestic trigger to gauge the pace and quantum of interest rate cuts by the Reserve Bank of India.
Traders will be watchful ahead of a slew of key economic data due in the US this week. Estimates for US GDP growth and Personal Consumption Expenditure data for October, the Federal Reserve's preferred inflation gauge, and the minutes of the November meeting of the US Federal Open Market Committee are due later this week.
Domestic traders will look at developments on geopolitical tensions both in the Russia-Ukraine and West Asia conflicts, dealers said.
On Tuesday, the one-day call money rate may open around the Reserve Bank of India's repo rate of 6.50% due to demand for funds from banks in early trading hours owing to the reduced surplus liquidity.
GOVERNMENT BONDS
On Tuesday, the movement in US yields may lend gilt prices cues at the open, dealers said. Some dealers said expectations of a lower domestic Jul-Sept GDP growth may cause prices to open higher.
The yield on the 6.79%, 2034 bond is seen at 6.79-6.85% on Tuesday. The yield on the 7.10%, 2034 bond is seen at 6.82-6.88%. On Monday, the 6.79%, 2034 bond ended at INR 99.76, or 6.82% yield, and the 7.10%, 2034 bond closed at INR 101.68, or 6.85% yield.
OIS RATES
On Tuesday, swap rates may take cues from the movement of US Treasury yields and crude oil prices. US economic data due later in the week could lead to some volatility in swaps, though the impact may be limited as activity from foreign banks in Indian markets has decreased near the year-end, dealers said.
The swap rate in the one-year segment is seen at 6.45-6.63% and in the five-year segment at 6.18-6.33%. On Monday, the one-year swap rate closed at 6.53% and the five-year swap closed at 6.21%.
CALL
On Tuesday, the one-day call money rate may open around the RBI's repo rate of 6.50% due to demand for funds from banks in the early trading hours owing to the reduced surplus liquidity.
During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. On Monday, the one-day call rate ended at 6.24%.
RBI AUCTION
--12 states to raise INR 320 bln via bond sale
LIQUIDITY
--Total net inflows of INR 169.02 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 152.25 billion as redemption of state bonds
--INR 16.77 billion as coupon on state bonds
* Outflows
--Nil
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Cassandra Carvalho
Edited by Saji George Titus
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