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Informist, Saturday, Sept. 6, 2025

MUMBAI – The RBI and money markets will be shut Monday, as the holiday for Id-e-Milad was rescheduled from Friday. On Tuesday, bond prices and swap rates will track the movement of US Treasury yields after US non-farm payrolls for August showed a rise of 22,000.

The data showed the US only added 22,000 jobs in August, well below the consensus estimate of 75,000 job additions. The unemployment rate rose to 4.3% from 4.2% in July. In view of the data, the US Federal Open Market Committee is expected to cut policy rates by at least 25 basis points later this month, with 12.0% of the market expecting a 50-bps cut, according to the CME FedWatch tool. The 10-year US Treasury yield fell below 4.07% at 1840 IST for the first time since early April.

GOVERNMENT BONDS

On Tuesday, traders will track the state bond auction result. Seven states will raise INR 153.00 billion at Tuesday's auction. This is slightly higher than the indicated amount of INR 151.50 billion. Later in the week, traders will track August CPI inflation data.

Details of meetings between the RBI and bank treasury officials may lend cues. Developments on a potential India-US bilateral trade deal will also be watched closely. Bond prices may also track the movement of crude oil prices and the rupee against the dollar. The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.42-6.60%. The bond Friday closed at INR 99.03, or a yield of 6.4651%.

OIS RATES

Money markets will be shut on Monday for Id-e-Milad, following the Maharashtra government's notification. On Tuesday, swap rates are likely to fall sharply, tracking US Treasury yields after the non-farm payrolls data, dealers said.

Traders may also take cues from geopolitical developments, especially on US-imposed tariffs on India. Lack of domestic cues on interest rates may keep some traders on the sidelines, dealers said.

Swaps may also track the movement of crude oil prices and the rupee against the dollar. The one-year swap rate is seen in the range of 5.42-5.55% Tuesday. The five-year contract is seen at 5.60-5.75%. The one-year OIS ended at 5.49% Friday and the five-year OIS ended at 5.72%.

CALL

The market will be shut on Monday. On Tuesday, the one-day call money rate is likely to open below the RBI's repo rate of 5.50% on low funding needs. During the day, the call rate is seen in the range of 4.65-5.50%, dealers said.

RBI AUCTION

--Seven states to auction bonds worth INR 153 billion on Tuesday. 

LIQUIDITY

--Total net outflows of INR 31.43 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 5.46 billion on Sunday for coupon payment on state bonds. 

-- INR 23.05 billion on Monday for coupon payment on state bonds. 

-- INR 20.86 billion on Tuesday for coupon payment on state bonds. 

-- INR 112.50 billion on Tuesday for redemption of state bonds. 

-- INR 56.69 billion on Tuesday for coupon payment on 7.40% 2035 bond. 

* Outflows

-- INR 250 billion as payment for gilts on Monday.

End

Reported by Kabir Sharma

Edited by Avishek Dutta

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