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Informist, Tuesday, Oct. 14, 2025

 

By Cassandra Carvalho

 

MUMBAI – Prices of government bonds across most tenures ended higher Tuesday, tracking an intraday fall in US Treasury yields, aided by slightly lower-than-expected cut-off yields at the weekly state bond auction, dealers said. A fall in overnight indexed swap rates also triggered a rise in bond prices, dealers said. 

 

The 10-year benchmark 6.33%, 2035 gilt closed at INR 98.76, or a yield of 6.51%, as against INR 98.66, or 6.52% yield, Monday. The newly-issued 6.48%, 2035 bond ended at INR 100.26, or a yield of 6.44%, against INR 100.22 or 6.45% Monday. The five-year benchmark 6.01%, 2030 bond ended 10 paise higher at INR 99.60, while the 6.90%, 2065 bond ended at INR 96.83, down 22 paise. At 1700 IST, the yield on the 10-year benchmark US Treasury note was 4.02%, compared with 4.04% at the same time Monday, after hitting a low of 4.00% intraday.
 

"Everything is good only, I feel like the new 10-year (6.48%, 2035 bond) will fall to 6.40% (yield) soon. It will take some time, but it will happen," a dealer at a state-owned bank said. "US yields are also helping." 

 

US yields eased as the government shutdown, which is generally viewed as positive for bonds, continued, alongside safe-haven demand due to the escalation of trade conflicts between the US and China. Ahead of the US Federal Open Market Committee's meeting at the end of this month, traders await a keynote speech by US Federal Reserve Chair Jerome Powell Tuesday. Overnight indexed swap rates fell, tracking the fall in US yields as traders began to price in rate cuts both in the US and India. The five-year swap rate ended at 5.60%, its lowest closing level since Jun 5, which aided a rise in bond prices. 

 

"I think swap rates are the next thing to watch out for, because if the 5.55-5.60% range (on the 5-year OIS) breaks, we could fall to 5.47-5.48% and bonds will track that movement. And we have FOMC also coming up," a dealer at a private sector bank said.  

 

Foreign portfolio investors net bought gilts worth INR 7.28 billion Tuesday, as per Clearing Corp. of India data at 1800 IST. A fall in US yields widens the interest rate differential between safe-haven assets and emerging market debt, making the latter more appealing to foreign investors. In its investment outlook for Oct-Dec, Singapore-headquartered DBS Bank said Monday that current yields on Indian government bonds make these securities attractive to purchase. However, the bank's senior investment strategist said that Indian government bonds are facing competition from US Treasury notes, with the 10-year US Treasury note currently offering a yield of around 4%, up from 1-2?rlier.

 

Gains in bond prices were capped due to some profit booking by state-owned banks, though sales were not as aggressive as seen Monday, dealers said. State-owned banks were the only net sellers across segments Monday, net selling gilts worth INR 100.83 billion. Traders said the sales were largely from a few banks' held-to-maturity books and were centred in short-term illiquid gilts. Some state-owned banks also booked profits, which added to the sales, dealers said.  

 

Long-term bond prices were down Tuesday, as traders who had flocked to these tenures in recent sessions booked profits, dealers said. Some traders also favoured state bonds of comparable maturity due to the lower-than-indicated size of Tuesday's auction, which led to cut-off yields being slightly lower than expected. Traders did not view the fall in long-term gilt prices as concerning, and said it was just a temporary blip due to profit-booking and that the outlook for long-term bonds was positive in the near-term. Some dealers do not expect spreads in yields of 30-50-year maturity bonds to compress further, while others feel there is more space for yield compression in the 15-year 6.68%, 2040 bond. Several traders preferred purchasing the 15-year paper, with some trading on yield spreads over the newly-issued 10-year 6.48%, 2035 paper. Spread trades are more lucrative in the new 2035 paper than the 10-year benchmark since the former is trading at lower yields, dealers said. 

 

Traders closely tracked technical levels of gilt yields, and some were relieved after the 10-year benchmark gilt yield sustained a fall below the key 6.51% level Tuesday. Profit-booking capped a fall below the psychologically crucial 6.50% level. Dealers expect the yield to fall to 6.48% in the near term, as traders price in a rate cut by the RBI's Monetary Policy Committee in December. The RBI will not hold a weekly gilt auction next week due to Diwali, and the lack of fresh supply next week aided the rise in prices, dealers said. 

 

This Friday, the government will sell INR 180 billion of the 6.01%, 2030 bond and INR 120 billion of the 7.09%, 2074 bond. In spite of the fresh supply of the five-year bond this week, the yield on the gilt ended nearly 3 bps lower Tuesday on bets of a rate cut in December, dealers said.  

 

Turnover in the gilts market was INR 608.40 billion, higher than INR 586.45 billion Monday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. There were six trades worth INR 1.50 billion in the 2033 floating rate bond and two trades worth INR 100 million in the 6.33%, 2035 bond using the RBI's wholesale e-rupee pilot Tuesday, as against no trades using the e-rupee Monday.

 

OUTLOOK

On Wednesday, government bonds may take cues from the overnight movement in US Treasury yields after Powell's speech. Traders will position ahead of the release of the minutes of the MPC's October meeting, due post-market hours Wednesday. Traders will closely track comments of RBI Governor Sanjay Malhotra after the governor said on Oct. 1 that there is space to ease policy further. The 6.48%, 2035 bond yield is seen falling to 6.40?fore the next policy review in December, dealers said. Later in the week, traders will realign portfolios ahead of the weekly gilt auction Friday. 

 

Geopolitical developments, rupee and crude oil price movements will influence movement in gilts Wednesday. The impact of offshore triggers may be limited, with traders' focus on domestic monetary policy easing, dealers said. The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.46-6.55%.

 

	TUESDAY		MONDAY
	PRICE	YIELD	PRICE	YIELD
6.33%, 2035	98.7550	6.5063%	98.6600	6.5198%
6.48%, 2035	100.2625	6.4436%	100.2200	6.4495%
6.01%, 2030	99.5000	6.1298%	99.3975	6.1549%
6.68%, 2040	98.9700	6.7902%	98.9100	6.7968%
6.90%, 2065	96.8300	7.1415%	97.0500	7.1243%

 

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India Gilts: Up on fall in US yields; state bond auction cut-offs tad better

 

	1640 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.75	98.79	98.62	98.65	98.66
YTM (%)	6.5070	6.5020	6.5264	6.5213	6.5198

 

	1640 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	100.25	100.29	100.17	100.19	100.22
YTM (%)	6.4453	6.4405	6.4563	6.4535	6.4495

 

India Gilts: Up on fall in US yields; state bond auction cut-offs tad better

 

MUMBAI--1640 IST--Government bond prices rose tracking a fall in US Treasury yields during the day, dealers said. Bonds held on to gains after the result of the state bond auction were slightly better than expected, especially with the size of the auction being lower than expected.

 

The 10-year US yield fell to a low of 4.00% intraday from 4.05% at 0900 IST. Meanwhile, the Reserve Bank of India set the cut-off yield on Bihar's 20-year bond at 7.31%, against 7.33% expected in an Informist poll. The other cut-offs were in line with poll expectations.

 

"US (10-year US Treasury yield) is nearing 4% and US 10-year is down 4 basis points day over day, it is below the low of Friday," a dealer at a private sector bank said. "People are taking US into consideration before FOMC (US Federal Open Market Committee meeting)." The next FOMC meeting is at the end of the month and traders are widely expecting the US rate-setting panel to cut rates again.

 

The fall in US yields led to buys from foreign portfolio investors, who were net buyers of fully accessible route gilts, according to Clearing Corp. of India data. A fall in US yields led to a widening of the yield differential between the safe-haven asset and the emerging market bonds such as India, making them more attractive for foreign investors.

 

Increasing rate cut bets globally and a fall in the five-year overnight indexed swap rates to a four-month low of 5.60% also aided gilt prices. However, banks were likely booking profit as the yield on the 6.33%, 2035 bond neared 6.50%, a psychologically crucial level, dealers said. 

 

At 1615 IST, turnover in the gilts market was INR 523.75 billion, slightly lower than INR 572.45 billion at 1630 IST Friday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. During the day, the yield on the 10-year benchmark 6.33%, 2035 gilt is seen at 6.48-6.55% and on the 6.48%, 2035 bond is seen at 6.42-6.48%.  (Janwee Prajapati and Aaryan Khanna)

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India Gilts: Most in thin band, long-term bonds down as traders book profits

 

	1301 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.69	98.71	98.62	98.65	98.66
YTM (%)	6.5160	6.5131	6.5264	6.5213	6.5198

 

	1301 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.21	100.24	100.17	100.19	100.22
YTM (%)	6.4515	6.4463	6.4563	6.4535	6.4495

 

India Gilts: Most in thin band, long-term bonds down as traders book profits

 

MUMBAI--1301 IST--Most government bonds continued to move in a thin band as traders awaited fresh cues from the result of the smaller-than-indicated size of state bond auction Tuesday, dealers said. However, most longer-tenure bonds were down as traders sold them at a profit after a sharp rise in prices over the past few sessions, they said.

 

"People are profit booking and there is not short-term view of yields falling though rate cut expectations are still there," a dealer at a private sector bank said. "On long end too, the rally is mostly over, now there is still another 5 basis-point compression we could see but we need more clarity (on rates) to go there."

 

Demand at the state bond auction Tuesday was seen firm, with banks and some mutual funds bidding for shorter tenure bonds, dealers said. Demand from traders for longer tenure bonds was also seen firm, but due to the higher concentration of the state bond supply Tuesday in bonds maturing in over 10 years, demand from long-term investors was not seen aggressive, they said. 

 

Investor demand for longer tenure gilts in the secondary market was also muted, dealers said. Traders who had picked up longer tenure bonds while prices in the segment rose over the past sessions, sold at profits, they said. Traders also sold longer tenure bonds to pick up other shorter tenure gilts or state bonds maturing within 15 years. However, the lower supply of longer tenure bonds in Oct-Mar limited losses in these bonds, dealers said.

 

Traders still expect the Reserve Bank of India's Monetary Policy Committee to cut the repo rate by another 25 bps as early as December. India's September CPI inflation print released Monday was at 1.5%, the lowest since June 2017. Though the inflation print kept hopes of a rate cut open, traders look for further clarity on any US-India trade deal, or the GDP growth numbers to further ramp up bets of a rate cut. Traders are now waiting for minutes of the Monetary Policy Committee's October meeting, due Wednesday, though some expect it to be a non-event, dealers said. 

 

The turnover in the gilt market was INR 198.20 billion, slightly lower than INR 177.65 billion at 1230 IST Monday, according to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform. During the day, the yield on the 10-year benchmark 6.33%, 2035 gilt is seen at 6.48-6.55% and that on the 6.48%, 2035 bond at 6.42-6.48%.  (Srijita Bose)

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India Gilts: In thin band; traders await state bond auction result for cues

 

	1010 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.64	98.71	98.63	98.65	98.66
YTM (%)	6.5235	6.5131	6.5242	6.5213	6.5198

 

	1010 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.19	100.24	100.19	100.19	100.22
YTM (%)	6.4535	6.4463	6.4535	6.4463	6.4495

MUMBAI--1010 IST--Government bond prices were in a thin band ahead of the state bond auction 1030-1130 IST, dealers said. The smaller-than-indicated auction Tuesday aided market sentiment, and demand was seen firm at the auction. However, some banks may be trimming their gilt holdings at a profit, leading to some pressure on bond prices. 

 

Eight states will borrow INR 128 billion, lower than the indicated size of INR 291 billion, at the weekly auction Tuesday. Traders said they prefer the state government bonds over gilts of similar maturity as the spreads were favourable. The auction result will likely give some cues to the market, dealers said.

 

"Market is mostly range-bound, there is still positivity around the (state bond) auction if we see good investor demand there, we could see an uptick in prices later in the day," a dealer at a private sector bank said.

 

Traders await the release of minutes of the Reserve Bank of India's last Monetary Policy Committee meeting on Wednesday at 1700 IST to take further bets on rate cuts in India. While the panel indicated room for further monetary policy easing in October, traders will gauge the members' assessment of the economy and how strong the intent to cut rates is, using the minutes, dealers said. Traders expect the MPC to cut rates in December, especially as September's CPI inflation was at an over eight-year low of 1.54% and October's retail inflation is seen as low as 0.2%, according to IDFC FIRST Bank.

 

The turnover in the gilt market was INR 54.00 billion, similar to INR 54.20 billion at 0930 IST Monday, according to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform. During the day, the yield on the 10-year benchmark 6.33%, 2035 gilt is seen at 6.48-6.55% and on the 6.48%, 2035 bond is seen at 6.48-6.55%. (Janwee Prajapati)

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India Gilts: Seen up on small state bond auction size Tue

 

MUMBAI – Government bond prices are seen opening higher due to the small state bond auction size Tuesday, dealers said. Longer tenure bonds are expected to continue their outperformance, and results of the state bond auction could lend cues to the market later in the day, they said. 

 

The yield on the 6.33%, 2035 gilt is seen moving in a range of 6.48-6.56% during the day. On Monday, the 2035 gilt ended at INR 98.66 or 6.52% yield. Meanwhile, the newly issued 10-year 6.48%, 2035 bond is expected to move in a range if 6.42-6.47%. On Monday, it ended at INR 100.22 or 6.45% yield. 

 

On Tuesday, states will raise INR 128 billion through a bond auction. According to the indicative calendar for state bond issuance in Oct-Mar, states were to raise INR 291 billion Tuesday. Traders expect the yield spread on state bonds over similar maturities of gilts to narrow as supply pressures ease. 

 

Long-term investors could tap the secondary market if demand is aggressive at the state bond auction, dealers said. Meanwhile, traders are likely to book profits as prices rise, they said. Gilts maturing in five years are likely to underperform due to INR 180 billion supply of the benchmark 6.01%, 2030 bond at auction on Friday.

 

Traders will position themselves ahead of the release of minutes of the Reserve Bank of India's last Monetary Policy Committee meeting on Wednesday. This could provide traders with some clarity on the rate trajectory that the panel may decide at its next meeting in December.  (Srijita Bose)

 

End

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

 

Edited by Saji George Titus

 

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