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Informist, Monday, Apr. 7, 2025

MUMBAI – Government bond prices and overnight indexed swap rates may take cues from the movement in US Treasury yields at open Tuesday. Traders may also take cues from any statement on the US rate trajectory by US Federal Reserve Governor Adriana Kugler late Monday. 

Crude oil prices could also be a trigger for gilts and swaps after falling sharply the past week, dealers said. A sharp movement in the rupee against the dollar may also provide cues. Traders may continue to realign their portfolios Tuesday, the last trading session before the Reserve Bank of India's Monetary Policy Committee decision Wednesday, dealers said.

On Tuesday, the one-day call rate may open above the repo rate as banks will borrow funds to meet their reserve requirements in early trade.

GOVERNMENT BONDS

On Tuesday, gilt prices may take cues from the movement of US Treasury yields, dealers said. Traders may take cues from the results of the INR-35-billion state bond auction and the RBI's INR-200-billion open market purchase of gilts. Cut-off yields at the state bond auction are expected to be aggressive, while cut-off prices at the OMO auction are seen in line with current market valuations, dealers said.  

The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.45-6.53% Tuesday. On Monday, the 10-year gilt ended at INR 102.15, or 6.48% yield.

OIS RATES

On Tuesday, swap rates may take cues from the movement in US Treasury yields, dealers said. The movement in Indian government bond yields may also lend cues to swap rates.

Short-term swaps will closely track the movement in the overnight Mumbai Interbank Offer Rate, with the RBI's liquidity measures seen keeping the rate near the repo rate of 6.25%, dealers said. Any substantial change in liquidity will also be closely tracked by traders.

The one-year swap rate is seen at 5.90-5.95% and the five-year rate at 5.73-5.80%. On Monday, the one-year swap rate ended at 5.90% and the five-year swap rate closed at 5.77%.

CALL

On Tuesday, the one-day call rate may open above the repo rate as banks will borrow funds to meet their reserve requirements in early trade. During the day, the call rate is seen in the range of 5.80-6.50% and the triparty repo rate in the range of 5.75-6.30%. On Monday, the one-day call rate ended at 5.85%.

RBI AUCTION 

--RBI to buy five gilts worth INR 200 billion via OMO auction 0930-1030 IST 

--Three states to raise INR 35 billion via bond sale 1030-1130 IST

--RBI to hold overnight VRR auction for INR 500 billion 1000-1030 IST

LIQUIDITY

--Total net inflows of INR 100.39 billion. The 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 20.45 billion as coupon on 7.27%, 2026 gilt

--INR 63.90 billion as coupon on 7.10%, 2034 gilt

--INR 10.04 billion as coupon on state bonds

--INR 6.00 billion as redemption of state bonds

* Outflows

--INR 165.05 billion on reversal of overnight VRR tender

End

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

Edited by Saji George Titus

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