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Informist, Tuesday, Jan. 7, 2025

MUMBAI – On Wednesday, bond prices and swap rates may take cues from the overnight movement of US Treasury yields after the release of the US Job Openings and Labor Turnover Survey for November, the December ISM Report on Business Services PMI and the comments of US Federal Reserve Bank of Richmond President Thomas Barkin post Indian market hours, dealers said. 

Bond prices and swap rates will likely remain data-dependent for the rest of the week, with a slew of US jobs data lined up, including non-farm payrolls numbers. The US Federal Open Market Committee's December meeting minutes are also awaited. Traders may take cues from these triggers due to a lack of domestic interest-rate triggers until CPI data for December is published next week.

Traders will also track the number of Human Metapneumovirus (HMPV) cases in the country, with seven cases confirmed by the central government on Tuesday. Any shutdown or slowing of economic activity, similar to lockdowns seen during the COVID-19 pandemic, would see a rise in gilt prices as the RBI could cut rates sooner to aid economic growth. Any major geopolitical developments and a further rise in crude oil prices could also lend cues to gilt prices and swap rates at the open.

On Wednesday, the one-day call rate may open above the repo rate of 6.50% on demand for funds from banks. During the day, the call rate is seen in a range of 6.00-6.80%, dealers said.

GOVERNMENT BONDS

On Wednesday, bond prices may take cues from the overnight movement of US Treasury yields after US economic data prints, dealers said. While traders expect a further fall in prices after the release of the first advance estimate of India's GDP for 2024-25 (Apr-Mar), a fall in US yields could reverse the price movement. 

During the day, gilt prices will also track the movement in the Indian rupee against the dollar, after it hit a record closing low for the tenth straight session Monday. The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.70-6.80% during the day. On Tuesday, the 2034 bond settled at INR 100.28, or 6.75% yield.

OIS RATES

On Wednesday, swap rates may take cues from the movement of US yields after the Job Openings and Labor Turnover Survey for November is released by the US government, dealers said. Traders also look ahead to the US December employment report for cues on interest rate cuts in the world's largest economy. 

The swap rate in the one-year segment is seen at 6.42-6.55% and in the five-year segment at 6.10-6.25%. On Tuesday, the one-year swap rate ended at 6.47% and the five-year swap rate closed at 6.16%.

CALL 

On Wednesday, the one-day call rate may open above the repo rate of 6.50% on demand for funds from banks. During the day, the call rate is seen in a range of 6.00-6.80%, dealers said. On Tuesday, the one-day call rate ended at 6.25%.

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 120 billion

--RBI to auction 182-day T-bills worth INR 80 billion

--RBI to auction 364-day T-bills worth INR 80 billion

LIQUIDITY

--Total net outflows of INR 145.86 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 40.74 billion as coupon on 7.17%, 2028 gilt
--INR 8.65 billion as coupon on state bonds

* Outflows

--INR 195.25 billion as payment on state bonds

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Cassandra Carvalho

Edited by Deepshikha Bhardwaj

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