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Informist, Monday, Dec. 16, 2024

MUMBAI – On Tuesday, government bonds and overnight indexed swap rates will take cues from the overnight movement in US yields after the US Flash Manufacturing and Services purchasing managers index data for December, dealers said.

The data will be one of the last prints for the US Federal Open Market Committee to examine before its monetary policy decision early Thursday. A print higher or lower than the consensus view could see a shift in the FOMC's outlook on growth and inflation, dealers said. Traders are likely to track the movement in US yields ahead of the FOMC's statement, amid lack of domestic cues. Any developments in West Asia, the Russia-Ukraine war, and crude oil prices may impact gilt prices and swap rates on Tuesday.

On Tuesday, the one-day call money rate may open above the Reserve Bank of India's repo rate of 6.50% due to demand for funds from banks. During the day, the call rate is seen in a range of 6.00-6.75%, dealers said.

GOVERNMENT BONDS

On Tuesday, bond prices will take cues from overnight movement in US yields after the release of the US Flash Manufacturing and Services Purchasing Managers' Index, dealers said. While crude prices rose Monday, dealers said the rise was negligible and gilts would take cues from this only if the jump in prices is significant. 

The yield on the 6.79%, 2034 bond is seen at 6.71-6.77% on Tuesday. On Monday, the 10-year benchmark 6.79%, 2034 gilt settled at INR 100.32, or 6.74% yield.

OIS RATES

On Tuesday, swap rates will take cues from overnight movement in US yields after the release of the US Flash Manufacturing and Services Purchasing Managers' Index, dealers said. Domestic traders will also look out for further news on geopolitical tensions, dealers said. The swap rate in the one-year segment is seen at 6.43-6.49% and in the five-year segment at 6.06-6.12%. On Monday, the one-year swap rate ended at 6.46% and the five-year swap rate closed at 6.09%.

CALL

On Tuesday, the one-day call money rate may open above the RBI's repo rate of 6.50% due to demand for funds from banks. During the day, the call rate is seen in a range of 6.00-6.75%, dealers said. On Monday, the one-day call ended at 6.70%.

RBI AUCTION

--13 states to raise INR 203.25 billion via bond sale

--RBI to hold 3-day VRR auction for INR 500-bln 1000-1030 IST

LIQUIDITY

--Total net inflows of INR 149.11 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 1.67 billion as coupon on state bonds

--INR 50.89 billion as coupon on 7.57%, 2033 gilt

--INR 14.96 billion as coupon on 7.69%, 2043 gilt

--INR 49.75 billion as coupon on 6.67%, 2050 gilt

--INR 31.84 billion as coupon on 7.63%, 2059 gilt

* Outflows

--Nil

End

Reported by Cassandra Carvalho

Edited by Avishek Dutta

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