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Informist, Wednesday, Nov. 27, 2024

MUMBAI – On Thursday, government bond prices and overnight indexed swap rates may take cues from overnight movement in US Treasury yields after the release of economic data, dealers said.

The second estimate for US Jul-Sept GDP data was unchanged at 2.8%, in line with Dow Jones estimates. US unemployment claims for the week ended Saturday fell by 2,000 to 213,000 against a Dow Jones estimate of 215,000. The 10-year US yield was little changed following the data releases.

The US Personal Consumption Expenditures Price Index, the US Federal Reserve's preferred inflation gauge, came in at 2.3% on year in October from 2.1% in September, also in line with estimates.

India's GDP data for Jul-Sept, due 1600 IST Friday, will also be tracked by traders as it is the next domestic trigger to gauge the pace and quantum of interest rate cuts by the Reserve Bank of India's Monetary Policy Committee before its December meeting. According to an Informist poll, GDP growth is likely to have moderated to a six-quarter low of 6.5% in Jul-Sept.

Domestic traders will look out for further news on geopolitical tensions, both in the Russia-Ukraine conflict and in West Asia, dealers said. The movement of crude oil prices may also lend cues to gilt prices at the open, dealers said.

On Thursday, 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 early trading hours to meet reserve requirements.

GOVERNMENT BONDS

On Thursday, the market may take cues from the movement in US yields after inflation and growth data, dealers said. Traders may also realign portfolios ahead of the release of India's Jul-Sept GDP print, due 1600 IST Friday.

The yield on the 6.79%, 2034 bond is seen at 6.78-6.84% Thursday. The yield on the 7.10%, 2034 bond is seen at 6.81-6.87%. On Wednesday, the 6.79%, 2034 bond ended at INR 99.83, or 6.81% yield, and the 7.10%, 2034 bond closed at INR 101.76, or 6.84% yield.

OIS RATES

On Thursday, swap rates may take cues from the movement of US Treasury yields after the release of US inflation and growth data. Traders may remain cautious and avoid large bets before the release of India's Jul-Sept GDP data on Friday. Incremental bets may, however, rise as the data release gets closer, dealers said.

The swap rate in the one-year segment is seen at 6.50-6.57% and in the five-year segment at 6.15-6.25%. On Wednesday, the one-year swap rate closed at 6.53% and the five-year swap closed at 6.19%. 

CALL

On Thursday, 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 early trading hours to meet reserve requirements. During the day, the call rate is seen in a range of 6.00-6.70%, dealers said. On Wednesday, the one-day call rate ended at 6.75%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 36.19 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 150.00 billion on redemption of 91-day T-bills

--INR 49.99 billion on redemption of 182-day T-bills

--INR 90.10 billion on redemption of 364-day T-bills

--INR 27.16 billion as coupon on state bonds

--INR 20.08 billion as coupon on 6.62%, 2051 gilt

* Outflows

--INR 170.00 billion as payment on 91-day T-bills

--INR 70.00 billion as payment on 182-day T-bills

--INR 61.14 billion as payment on 364-day T-bills

--INR 250.01 billion as reversal of six-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 Rajeev Pai

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