India Money Market Outlook
Gilts, swaps to take cues from US yields Mon
This story was originally published at 21:37 IST on 7 March 2025
Register to read our real-time news.Informist, Friday, Mar. 7, 2025
MUMBAI – On Monday, government bond prices and overnight indexed swap rates are likely to take cues from the movement in US Treasury yields after Friday's release of US non-farm payrolls data for February, dealers said. The US employment report showed the economy added 151,000 jobs in February against 170,000 estimated by a Wall Street Journal poll. Money markets are shut Saturday.
US Federal Reserve Chair Jerome Powell is also scheduled to speak Friday, and comments by Fed officials John Williams, Michele Bowman, and Adriana Kugler are also awaited.
Market participants will assess any statements by US President Donald Trump on tariffs and their potential impact on global trade. Crude oil prices could also be a trigger for swaps if they move significantly, dealers said. A sharp movement of the rupee against the dollar could also give cues to gilts and swaps.
On Monday, 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% and the triparty repo rate in the range of 5.75-6.25%.
GOVERNMENT BONDS
Gitls are not traded Saturday. On Monday, gilt prices are likely to take cues from the movement in US yields after the release of US non-farm payrolls data for February Friday, dealers said. Traders may continue buying bonds which the Reserve Bank of India plans to buy at Wednesday's open market gilt purchase auction. Other short-tenure bonds are also expected to remain in favour due to the RBI's proactive measures to prevent systemic liquidity from falling into a significant deficit, dealers said.
The RBI also said 20 states will raise INR 495.22 billion through the sale of state bonds Tuesday against INR 386.26 billion indicated. However, traders were already expecting an auction of INR 400 billion-INR 500 billion and are not seen reacting to the higher supply, dealers said.
The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.65-6.73% during the day. On Friday, the bond settled at INR 100.71, or 6.69% yield.
OIS RATES
Swaps are not traded Saturday. On Monday, swap rates may take cues at the opening from the movement in US Treasury yields, dealers said. Swap rates may also track the movement of government bond yields during the day. Short-term swaps may fall more during the day due to the RBI's liquidity measures and tracking the movement in overnight Mumbai Interbank Offer Rate, the floating leg of the OIS contract.
The one-year swap rate is seen at 6.16-6.26% and the five-year rate is seen at 5.90-6.04%. On Friday, the one-year swap rate ended at 6.20% and the five-year swap rate closed at 5.97%.
CALL
Money markets are shut Saturday. On Monday, 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% and the triparty repo rate in 5.75-6.25%. On Friday, the three-day call rate ended at 5.80%.
RBI AUCTION
--RBI to hold overnight variable rate repo auction for INR 750 billion 1000-1030 IST
LIQUIDITY
--Total net inflows of INR 119.38 billion. The calculation of flows does not take into account the redemption of the standing deposit facility and scheduled VRR and variable rate reverse repo operations.
* Inflows
--INR 22.94 billion as coupon on state bonds on Saturday
--INR 10.00 billion on redemption of state bonds on Saturday
--INR 56.69 billion as coupon on 7.40%, 2035 gilt Sunday
--INR 20.86 billion as coupon on state bonds on Sunday
--INR 3.88 billion as coupon on state bonds on Monday
--INR 5.00 billion on redemption of state bonds on Monday
* Outflow
--INR 39.70 billion as reversal of 3-day VRR tender on Monday
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Srjita Bose
Edited by Rajeev Pai
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.
To read more please subscribe
Share this Story:
