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Informist, Wednesday, Oct. 1, 2025

MUMBAI – On Friday, government bond prices and overnight indexed swap rates may take cues from the movement in US Treasury yields at open, dealers said. However, unless US yields move sharply, gilt prices are seen steady ahead of INR 320 billion gilt auction, they said. Indian financial markets will be shut Thursday for Mahatma Gandhi Jayanti.  

On the global front, traders may track developments in the US after the government partially shut down Wednesday. The shutdown may delay Friday's payrolls data, adding relevance to the job openings and labour turnover survey and other jobs data. The US Labour Department said in a contingency plan that the Bureau of Labour Statistics would suspend all operations and that economic data scheduled to be released during the lapse would not be released if the government shut down. The ADP data for September showed private sector jobs fell by 32,000, much lower than the consensus forecast of 45,000 additional jobs by economists in a poll by The Wall Street Journal.

Traders may take cues from any developments regarding US tariffs on Indian goods. Gilts and swaps may also track the movement in the rupee against the dollar and crude oil prices.

On Friday, the three-day call money rate may open near the Reserve Bank of India's repo rate due to reversal of the two-day variable rate repo auction.

GOVERNMENT BONDS

On Friday, government bond prices are seen steady ahead of the INR 320 billion worth of gilt auction of a new 10-year bond. Gilts will take cues from the result of the auction later in the day, dealers said. 

Traders expect gilts to rise after the RBI's Monetary Policy Committee opened the doors to a rate cut in the future. The 2035 bond yield is seen falling up to 6.40-6.45% levels, but traders will wait for the auction and CPI inflation for September as the next trigger to take further cues, dealers said.  

The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.45-6.60% on Friday. On Wednesday, the 2035 bond ended at INR 98.68 or 6.52% yield. 

OIS RATES

On Friday, swap rates may take cues from the movement of US Treasury yields at open. Later in the day, swaps are likely to track the movement of gilt yields as traders fully digest the outcome of the MPC outcome on Wednesday. Bets of a rate cut in December are likely to ramp up after the governor signalled that low inflation opened space for policy easing. 

The one-year swap rate is seen in the range of 5.40-5.50% and the five-year contract at 5.62-5.73%. On Wednesday, the one-year swap rarte ended at 5.44% and the five-year swap rate ended at 5.68%.

CALL

On Friday, the three-day call money rate is likely to be near the RBI's repo rate due to reversal of the variable rate repo auction. During the day, the three-day call money rate is seen in a range of 4.75-5.50%, dealers said. On Wednesday, the two-day call rate ended at 5.00%.

RBI AUCTION

--Government to auction one gilt worth INR 320 billion on Friday

LIQUIDITY

--Total net inflows of INR 75.25 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 101.770 billion on redemption of 91-day Treasury bills on Thursday

--INR 50.00 billion on redemption of 182-day T-bills on Thurday

--INR 6.00 billion as coupon on state bonds on Thursday

--INR 88.77 billion on redemption of 364-day T-bills on Friday

--INR 20.77 billion as coupon on state bonds on Friday

* Outflows

--INR 72.00 billion as payment for 91-day T-bills on Friday

--INR 60.00 billion as payment for 182-day T-bills on Friday

--INR 60.05 billion as payment for 364-day T-bills on Friday

--INR 73.70 billion on reversal of two-day variable rate repo tender on Friday

End

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

Reported by Srjita Bose

Edited by Avishek Dutta

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