More Stories

Informist, Wednesday, Feb. 12, 2025

MUMBAI – On Thursday, government bond prices are seen opening lower tracking an overnight rise in US Treasury yields after US CPI inflation for January was higher than expected, dealers said. Overnight indexed swap rates are seen opening higher due to the same reason.

The US consumer price index for January rose 0.5% on month, against a Dow Jones estimate of 0.3%. The higher-than-expected reading may reduce expectations of the US Federal Open Market Committee cutting rates in the first half of this year. The FOMC left rates unchanged at its meeting last month. US yields may also take cues from the comments of US Federal Reserve Bank of Atlanta President Raphael Bostic. The yield on the 10-year US Treasury note was 4.65% at 2000 IST, up from 4.54% at 1700 IST Wednesday.

On the domestic front, bond prices and swap rates will take cues from the Reserve Bank of India's INR 400-billion open market purchase of gilts via auction at 1030-1130 IST. Short-term bond prices could rise, and rates on shorter-tenure contracts could fall after the RBI, post market hours, announced a 49-day variable rate repo auction of INR 750 billion on Friday, dealers said. Traders await any additional measures by the RBI to ease the liquidity deficit in the banking system.  

Gilts and swaps may also take cues from the movement of the rupee against the dollar, as well as any comments by US President Donald Trump on political and economic measures. Crude oil prices may also be a trigger, dealers said.

On Thursday, the one-day call money rate may open above the RBI's repo rate of 6.25% due to demand for funds from banks early in the day to meet reserve requirements. During the day, the call rate is seen in the range of 5.75-6.40%, dealers said.

GOVERNMENT BONDS

On Thursday, gilt prices are likely to open lower tracking an overnight rise in US Treasury yields following the release of the US CPI inflation data for January, dealers said. The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.65-6.78% for the day. On Wednesday, the bond settled at INR 100.61, or 6.70% yield.

OIS RATES

On Thursday, swap rates will take cues from the overnight movement of US Treasury yields after the US CPI data for January was released, dealers said. 

The one-year swap rate is seen at 6.31-6.41% and the five-year rate is seen at 6.09-6.19%. On Wednesday, the one-year swap rate ended at 6.36% and the five-year swap rate closed at 6.15%.

CALL

On Thursday, the one-day call money rate may open above the RBI's repo rate of 6.25% due to the demand for funds from banks early in the day to meet reserve requirements. During the day, the call rate is seen in the range of 5.75-6.40%, dealers said. On Wednesday, the one-day call rate ended at 5.50%.

RBI AUCTION

--RBI to hold overnight VRR auction for INR 2.75 trillion 1000-1030 IST

--RBI to buy 5 gilts worth INR 400 bln via OMO auction

LIQUIDITY

--Total net outflows are INR 111.82 billion. Calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and reverse repo operations.

* Inflows

--INR 88.73 billion as redemption on 91-day T-bills

--INR 90.69 billion as redemption on 364-day T-bills

--INR 7.30 billion as coupon on state bonds

* Outflows

--INR 133.89 billion as payment for 91-day T-bills

--INR 81.79 billion as payment for 182-day T-bills

--INR 82.87 billion as payment for 364-day T-bills

--INR 1.94 trillion as reversal of overnight 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 Ashish Shirke

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.