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Informist, Tuesday, Feb. 18, 2025

MUMBAI – Government bond prices and overnight indexed swap rates on Thursday will take cues from the movement in US Treasury yields after the release of the minutes of the US Federal Open Market Committee's meeting, dealers said. The minutes for the meeting held in January will be released at 0030 IST Thursday. Money markets are shut Wednesday for Chhatrapati Shivaji Maharaj Jayanti.

Traders also await the minutes of the Reserve Bank of India's Monetary Policy Committee meeting in February, due on Friday. Geopolitical developments and US trade policy may also lend cues.
 

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 Thursday, 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%, dealers said.

GOVERNMENT BONDS

On Thursday, government bond prices will take cues from the movement in US Treasury yields after the release of the minutes of the US FOMC meeting. Bond prices are also likely to take cues from the result of the RBI's INR 400-billion open market purchase of gilts via auction at 1030-1130 IST. The RBI will also auction INR 330 billion worth of Treasury bills at the same time. The clash of timings is not expected to impact bidding at either of the auctions, dealers said.

The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.64-6.74% during the day. On Tuesday, the bond settled at INR 100.72, or 6.69% yield.

OIS RATES

On Thursday, swap rates may take cues from the movement in US Treasury yields after the release of the US FOMC minutes early Thursday, dealers said. 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 repo 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 6.02-6.15%. On Tuesday, the one-year swap rate ended at 6.29% and the five-year swap rate closed at 6.07%.

CALL

On Thursday, 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 Tuesday, the 2-day call rate ended at 6.35%.

RBI AUCTION

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

--RBI to buy 6 gilts worth INR 400 billion via OMO auction Thursday

--RBI to auction 91-day T-bills worth INR 140 billion on Thursday

--RBI to auction 182-day T-bills worth INR 120 billion on Thursday

--RBI to auction 364-day T-bills worth INR 70 billion on Thursday

LIQUIDITY

--Total net outflows are INR 122.56 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 70.00 billion as redemption of 182-day T-bills on Thursday

--INR 91.26 billion as redemption of 364-day T-bills on Thursday

--INR 14.18 billion as coupon on state bonds on Thursday

* Outflows
--INR 298.00 billion as payment for state bonds on Thursday

--INR 717.73 billion as reversal of 2-day variable rate repo tender on Thursday

End

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

Reported by Cassandra Carvalho

Edited by Saji George Titus

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