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Informist, Monday, Feb. 17, 2025

MUMBAI – On Tuesday, government bond prices and overnight indexed swap rates will take cues from the movement of US Treasury yields in Asian trade, dealers said. US financial markets were shut Monday for Presidents' Day.

Traders are waiting for the minutes of the US Federal Open Market Committee's meeting that was held in January and the minutes of the Reserve Bank of India's Monetary Policy Committee meeting held earlier this month. Both are due this week. Market participants will closely assess any statements by US President Donald Trump on tariffs and their potential impact on global trade.

Gilts and swaps may also take cues from the movement of the rupee against the dollar. Crude oil prices may also be a trigger, dealers said. Traders await any additional measures by the RBI to ease the liquidity deficit in the banking system.

On Tuesday, the one-day call rate may open around the repo rate on demand for funds from banks. During the day, the call rate is seen in a range of 5.75%-6.40%, dealers said.

GOVERNMENT BONDS

On Tuesday, government bonds are likely to take cues from the movement of US Treasury yields in Asian trade, dealers said. The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.65-6.72% during the day. On Monday, the bond settled at INR 100.67, or 6.69% yield.

OIS RATES

On Tuesday, swap rates may take cues from the movement in US yields in early Asian trade. Short-term swaps will take cues from the movement in the overnight Mumbai Interbank Offer Rate, which has been set well above the repo rate of 6.25% since the rate cut on Feb. 7. 

The one-year swap rate is seen at 6.24-6.36% and the five-year rate is seen at 6.02-6.18%. On Monday, the one-year swap rate ended at 6.30% and the five-year swap rate closed at 6.08%.

CALL

On Tuesday, the one-day call rate may open around the repo rate on demand for funds from banks. During the day, the call rate is seen in the range of 5.75%-6.40%. On Monday, the one-day call rate ended at 6.00%.

RBI AUCTION

--RBI to hold overnight VRR auction for INR 1.00 trillion 1000-1030 IST 

--Twelve states to raise INR 298 billion via bond sale

LIQUIDITY

--Total net inflows are INR 7.81 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 7.81 billion as coupon on state bonds

* Outflows

--INR 1.00 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

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