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Informist, Wednesday, Mar. 19, 2025

MUMBAI – On Thursday, government bond prices and overnight indexed swap rates may take cues from the movement in US Treasury yields after the outcome of the US Federal Open Market Committee's meeting at 2330 IST. The two-day FOMC meeting began Tuesday and the panel is expected to hold rates steady. However, traders will closely watch for the committee's view on the US' economic trajectory, along with comments by US Federal Reserve Chair Jerome Powell on President Donald Trump's imposition of tariffs and concerns about slowing growth.

Traders may also assess developments related to the US tariff policy and the rupee's movement against the dollar, dealers said. Crude oil prices could be a trigger if they move significantly.

On Thursday, the one-day call rate may open above the repo rate as banks will borrow funds to meet their reserve requirements. During the day, the call rate is seen in the range of 5.80-6.50% and the triparty repo rate is seen in the range of 5.75-6.40%.

GOVERNMENT BONDS

On Thursday, gilt prices may take cues from the movement of US yields after the US FOMC meeting outcome. Bond prices have not been closely tracking the movement of US Treasury yields in the past two weeks, and may sustain Wednesday's momentum as traders bet on the possibility of further domestic rate cuts and a stance change by the Reserve Bank of India's Monetary Policy Committee to 'accommodative' in April.

The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.62-6.70% during the day. On Wednesday, the bond settled at INR 100.90, or 6.66% yield.

OIS RATES

On Thursday, swap rates may take cues from the overnight movement in US yields after the US FOMC's rate decision. Short-term swaps will closely track the movement in the overnight Mumbai Interbank Offered Rate, with the RBI's proactive liquidity measures seen keeping the rate in check for the rest of March, dealers said.

The one-year swap rate is seen at 6.08-6.20% and the five-year rate at 5.90-6.03%. On Wednesday, the one-year swap rate ended at 6.10% and the five-year swap rate closed at 22-month low of 5.92%.

CALL

On Thursday, the one-day call rate may open above the repo rate as banks will borrow funds to meet their reserve requirements. During the day, the call rate is seen in the range of 5.80-6.50% and the triparty repo rate is seen in the range of 5.75-6.40%. On Wednesday, the one-day call rate ended at 5.85%.

RBI AUCTION

--RBI to hold overnight variable rate repo auction for INR 1.50 trillion

LIQUIDITY

--Total net inflows of INR 5.42 billion. The calculation of flows does not take into account the redemption of the standing deposit facility and scheduled variable rate repo and reverse repo operations.

* Inflows

--INR 166.00 billion on redemption of 91-day T-bills

--INR 91.12 billion on redemption of 364-day T-bills

--INR 4.55 billion as coupon on state bonds

--INR 50.42 billion as coupon on 7.59%, 2029 gilt

--INR 36.77 billion as coupon on 7.16%, 2050 gilt

* Outflows

--INR 140.00 billion as payment for 91-day T-bills

--INR 131.50 billion as payment for 182-day T-bills

--INR 71.93 billion as payment for 364-day T-bills

--INR 1 trillion as reversal of overnight variable rate repo tender

--INR 391.38 billion as reversal of second 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 Avishek Dutta

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