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Informist, Thursday, Sept. 4, 2025

 

 

 

 

MUMBAI – Gilts and swaps Friday may track the overnight movement of US Treasury yields after the release of weekly jobless claims in the US for the week ended Saturday, dealers said. The 10-year US Treasury yield was largely unchanged after weekly unemployment data showed jobless claims for the week ended Saturday were the highest since June. Initial jobless claims rose to 237,000, against a consensus expectation of 230,000.

 

 

The Reserve Bank of India said money markets will remain open on Friday and be closed on Monday for Id-e-Milad, following the Maharashtra government's notification.

 

 

Nearing the end of trade, traders may trim portfolios ahead of the long weekend, especially before the release of the US employment report for August after market hours Friday. Now that Monday is a holiday, trade volumes could be lower Friday since many traders will be on scheduled leave. Lack of scheduled domestic cues on interest rates may keep some traders on the sidelines, dealers said.

 

Details of meetings between the RBI and bank treasury officials may lend cues. Traders may also take cues from geopolitical development, after Commerce Minister Piyush Goyal said a US-India trade deal was likely by November. Gilt and swaps may also take cues from the movement of the rupee against the dollar and crude oil prices. 

 

On Friday, the four-day call money rate may open near the RBI's repo rate of 5.50% as traders expect less lenders in the market due to the rescheduling of the holiday for Id-e-Milad. During the day, the four-day call rate is seen in the range of 4.75-5.50%, dealers said.

 

GOVERNMENT BONDS

Friday, gilts may open lower on constant pressure from the heavy state bond supply. The RBI, after market hours, said seven states would raise INR 153.00 billion at Tuesday's auction. This is slightly higher than the indicated amount of INR 151.50 billion. This is the third consecutive state bond auction that the supply is higher than indicated. There are concerns that state borrowing will increase due to the GST reforms, dealers said. Meanwhile, some banks are approaching their internal limit on purchasing state bonds, they said. This is likely to increase the spread of state bonds over gilts.

The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.42-6.60%. The 10-year benchmark 6.33%, 2035 gilt closed at INR 98.83, or a yield of 6.4934% Thursday.

 

OIS RATES

On Friday, swap rates will track the movement in US Treasury yields ahead of key non-farm payrolls data after Indian market hours later in the day. Offshore flows to receive fixed rates are likely to continue on expectation of a rate cut by the US FOMC this month, its first since December.

 

The one-year swap rate is seen in the range of 5.48-5.58% Friday. The five-year contract is seen at 5.72-5.82%. The one-year OIS ended at 5.51% Thursday, while the five-year OIS ended at 5.75%.

 

CALL

On Friday, the four-day call money rate may open near the RBI's repo rate of 5.50% as traders expect less lenders in the market due to the rescheduling of the holiday for Id-e-Milad. During the day, the four-day call rate is seen in the range of 4.75-5.50%, dealers said. The four-day call rate ended at 5.50% Thursday.

 

RBI AUCTION

--Nil 

 

LIQUIDITY

--Total net inflows of INR 21.78 billion. The calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and variable rate reverse repo operations.

 

* Inflows

--INR 21.78 billion as coupon on state bonds

 

* Outflows

--Nil

 

End

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

 

Reported by Cassandra Carvalho

Edited by Akul Nishant Akhoury

 

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