More Stories

Informist, Thursday, Sept. 11, 2025

 

MUMBAI – On Friday, government bond prices and overnight indexed swap rates will track the overnight movement of US Treasury yields after the release of economic data in the US, dealers said.

 

Data released at 1800 IST showed that headline inflation in August rose 2.9% on year in the US, in line with estimates. Core CPI inflation rose 3.1% on year, also in line with estimates. As of 2026 IST, the CME FedWatch tool showed that Fed fund futures reflected a 11.1% probability of a 50 basis points rate cut by the US Federal Open Market Committee next week, up from 8.2?fore the data. Jobless claims for the week ended Saturday in the US rose by 27,000 to 263,000, higher than a Wall Street Journal estimate of 235,000, and the highest level in almost four years.

 

On the domestic front, the next cue on interest rates will be India's CPI inflation data for August that is scheduled at 1600 IST Friday, dealers said. CPI inflation in India likely rose to 2.1% in August from an eight-year low in July because of the fading of the statistical effect of a favourable base and rise in food and gold prices, according to an Informist poll. The reading is broadly priced into OIS rates and bond prices, and will not move the market if it is on expected lines, dealers said. Traders will closely track technical levels for cues.

 

Traders may also take cues from geopolitical developments, especially on the US tariffs on Indian goods. There has been some thaw in the relations between the two countries. US President Donald Trump on Tuesday said he was "pleased" to announce that India and the US were continuing negotiations to address the trade barriers between the two nations, and that there should be no difficulty in successfully concluding a trade deal. Mirroring Trump's sentiment on India-US trade negotiations, Prime Minister Narendra Modi said on Wednesday that the teams from the two countries were working to conclude the discussions at the earliest. Bond and swaps may also track the movement of crude oil prices and the rupee against the dollar.

 

On Friday, the three-day call money rate is likely to open near the Reserve Bank of India's repo rate of 5.50?fore the variable rate reverse repo auction. During the day, the call rate is seen in a range of 4.75-5.50%, dealers said.

 

GOVERNMENT BONDS

Friday, bond prices will track the overnight movement in US Treasury yields at the opening after the release of economic data in the world's largest economy, dealers said. Demand for the long-term bond 7.24%, 2055 at the weekly gilt auction will lend cues to bond prices later in the day, dealers said.

 

Details of meetings between the RBI and bank treasury officials on the central government's borrowing plan for Oct-Mar may also lend cues to traders. Aggressive sales or purchases from mutual funds will also impact bond prices. 

 

By the end of September, some dealers expect the 10-year benchmark gilt yield to reach 6.38-6.40% if the FOMC cuts rates and bets of a cut by the RBI's rate-setting panel in October build up. In the near term, an upside in the yield of the 10-year benchmark gilt could be capped at 6.55%, dealers said. The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.38-6.55%. The bond Thursday closed at INR 99.02, or a yield of 6.4666%.

 

OIS RATES

On Friday, swap rates are likely to track the movement of US Treasury yields after the release of US CPI data for August. A further fall in swap rates is unlikely, given the expected rate cut in the US, but traders remain uncertain about further rate cuts in India. Some traders may also pay the two- and five-year swap rates as part of bond forward or forward-rate agreements before the weekly gilt auction on Friday. At the same time, offshore traders are likely to continue receiving fixed rates and put downward pressure on swap rates, dealers said. 

 

The one-year swap rate is seen in a range of 5.42-5.55% Friday. The five-year contract is seen at 5.60-5.75%. The one-year OIS ended at 5.46% Thursday and the five-year OIS ended at 5.68%.

 

CALL

On Friday, the three-day call money rate is likely to open near the RBI's repo rate of 5.50?fore the VRRR auction. During the day, the call rate is seen in the range of 4.75-5.50%, dealers said. On Thursday, the one-day call money rate ended at 5.00%. 

 

RBI AUCTION

--Govt to auction two gilts worth INR 280 billion

--RBI to hold three-day VRRR auction for INR 1.50 trillion 0930-1000 IST 

 

LIQUIDITY

--Total net inflows of INR 100.67 billion. The calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and VRRR operations.

 

* Inflows

--INR 41.06 billion as coupon payment on state bonds

--INR 59.60 billion as coupon on 7.36%, 2052 gilt

--INR 1.50 trillion as reversal of eight-day variable rate reverse repo tender

--INR 201.75 billion as reversal of two-day variable rate reverse repo tender

 

* Outflows

--Nil

 

End

 

Reported by Cassandra Carvalho

Edited by Ashish Shirke

 

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.