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Informist, Monday, Dec. 23, 2024

MUMBAI – Government bond prices and overnight indexed swap rates may take cues from the movement in US Treasury yields overnight after the release of consumer confidence data in the world's largest economy. A lack of significant domestic cues may limit the volatility in both the markets, dealers said.

Trade volumes in both markets may also be muted as traders are on leave near Christmas and New Year. Any major geopolitical developments and movement in crude oil prices may lend cues to gilt prices and OIS rates at the open.

On Tuesday, the one-day call money rate may open near the repo rate of 6.50%, as banks have met most of their regulatory requirements despite a persistent liquidity deficit in the banking system.

GOVERNMENT BONDS

On Tuesday, prices of government bonds may take cues from the overnight movement in US yields after the release of consumer confidence data in the world's largest economy, dealers said. The weakening domestic currency--the rupee fell to a record low against the dollar Monday--may weigh on demand on gilts from foreign investors.

The yield on the 6.79%, 2034 bond is seen at 6.74-6.81% on Tuesday. On Monday, the 10-year benchmark bond settled at INR 100.10, or 6.77% yield.

OIS RATES

On Tuesday, swap rates will take cues from the movement in US yields due to the lack of any other data cues in the day, dealers said. Trade volumes could be low during the week as several traders are on leave for Christmas and New Year. Activity from foreign banks could be muted as they close their accounts at the end of the year, dealers said. 

The swap rate in the one-year segment is seen at 6.45-6.65% and in the five-year segment at 6.15-6.30%. On Monday, the one-year swap rate ended at 6.51% and the five-year swap rate closed at 6.19%.

CALL

On Tuesday, the two-day call money rate may open near the repo rate of 6.50%, as banks have met most of their regulatory requirements despite a persistent liquidity deficit in the banking system. During the day, the call rate is seen in a range of 6.00-6.70%, dealers said. On Monday, the one-day call rate ended at 6.25%.

RBI AUCTION

--15 states to raise INR 306.00 billion via bond sale

LIQUIDITY

--Total net inflows of INR 184.34 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 10.34 billion as coupon on state bonds

--INR 174.00 billion as redemption of state bonds

* Outflows

--INR 750.06 billion as the reversal of overnight variable rate repo auction

End

Reported by Vidhushi RajPurohit and Aaryan Khanna

Edited by Akul Nishant Akhoury

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