India Money Market Outlook
Gilts, swaps to take cues from US yields on Mon
This story was originally published at 21:56 IST on 13 December 2024
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MUMBAI – Money markets are closed Saturday. On Monday, government bonds and overnight indexed swap rates will take cues from the overnight movement in US yields, dealers said.
Traders will closely watch the movement in US yields ahead of the Federal Open Market Committee's policy statement early Thursday. While traders have priced in a 25-basis-point cut by the Federal Open Market Committee next week, January is expected to see a pause in rate cuts. Traders will also look out for further news on geopolitical tensions over the weekend, dealers said.
On Monday, the one-day call money rate may open near the Reserve Bank of India's marginal standing facility rate of 6.75% due to demand for funds from banks.
GOVERNMENT BONDS
On Monday, gilts may take cues from the movement in US yields throughout the weekend. Traders are likely to track US yields given the lack of domestic cues. Traders will also be watchful ahead of FOMC's statement. The FOMC is expected to cut the benchmark rate by 25 bps.
The yield on the 6.79%, 2034 bond is seen at 6.70-6.77% Monday. On Friday, the 2034 gilt settled at INR 100.43, or 6.73% yield.
OIS RATES
On Monday, swap rates will take cues from the overnight movement in US yields, dealers said. Traders will closely watch the movement in US yields ahead of the FOMC's policy statement early Thursday. Some bets could also be placed during the day on India's rate cut in February.
The swap rate in the one-year segment is seen at 6.30-6.50% and in the five-year segment at 5.90-6.10%. On Friday, the one-year swap rate ended at 6.41% and the five-year swap rate closed at 6.04%.
CALL
On Monday, the one-day call money rate may open near the RBI's marginal standing facility rate of 6.75% due to demand for funds from banks. During the day, the call rate is seen in a range of 6.00-6.80%, dealers said. On Friday, the three-day call ended at 6.80%.
RBI AUCTION
--Nil
LIQUIDITY
--Total net outflows of INR 20.33 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 22.02 billion as coupon on state bonds on Saturday
--INR 10.86 billion as coupon on state bonds on Sunday
--INR 29.33 billion as coupon on 5.22%, 2025 bond on Sunday
--INR 54.70 billion as coupon on 6.67%, 2035 bond on Sunday
--INR 32.63 billion as coupon on 7.72%, 2049 bond on Sunday
--INR 51.85 billion as coupon on 6.99%, 2051 bond on Sunday
--INR 35.99 billion as coupon on 6.80%, 2060 bond on Sunday
--INR 6.14 billion as coupon on state bonds on Monday
--INR 52.22 billion as coupon on 6.64%, 2035 bond on Monday
--INR 53.93 billion as coupon on 6.95%, 2061 bond on Monday
* Outflows
--INR 370.00 billion as payment of gilts on Monday
End
Reported by Srijita Bose
Edited by Deepshikha Bhardwaj
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