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Informist, Thursday, Nov. 20, 2025

 

MUMBAI – On Friday, government bond prices and overnight indexed swap rates are likely to track the movement in the US Treasury yields at open, after the release of a slew of economic data in the US. US jobs data for September was released after Indian market hours and painted a mixed picture of the world's largest economy. The US added 119,000 non-farm payrolls in September, against a poll estimate of 50,000. The unemployment rate in the same month rose to 4.4%, against a consensus of 4.3%.  The data has been delayed after the six-week US government shutdown was resolved only last week. US jobless claims for the week ended Nov. 15 fell by 8,000 to 220,000, against a Wall Street Journal poll estimate of 227,000.

 

The US Bureau of Labor Statistics Wednesday said it would not publish non-farm payrolls report for October as the US government partially shut down and was unable to gather data. It also delayed the release of November's monthly jobs report to Dec. 16 from the usual release data of the first Friday of the month. This makes Thursday's non-farm payrolls report for September the last large-scale data point for the labour market before the US Federal Open Market Committee's next meeting on Dec. 9-10.

 

India's GDP data for Jul-Sept, scheduled on Nov. 28--a week before the next policy review--is the next cue for indications of the rate trajectory. Traders largely expect a print of around 7.2%. State Bank of India sees India's GDP growth in Jul-Sept at 7.5%, against the RBI's projection of 7.0%. Some traders have priced in a higher print, since the Reserve Bank of India has said that while Jul-Sept growth will be strong, the growth trajectory later on could be weaker due to external risks, dealers said. Some traders expect an announcement about the India-US trade deal soon, which may dent bond prices and push up swap rates, as it signals a higher growth outlook and reduces the need for open-market operation auctions, dealers said. Movement of crude oil prices and the rupee against the dollar may also influence gilts and swaps. 

 

On Friday, the three-day call money rate may open near the RBI's repo rate as outflow for GST payments is expected to drain systemic liquidity, dealers said. However, due to the RBI's variable rate repo auction, rates may cool later in the day, dealers said. During the day, the three-day call money rate is seen in a range of 4.85-5.60%, dealers said.

 

GOVERNMENT BONDS
On Friday, bond prices may track overnight movement in US Treasury yields after the release of economic data in the US. Traders will track the net purchases and sales in the secondary market Thursday from the 'Others' segment, the category that includes the RBI, even as expectations of the central bank purchasing gilts onscreen to bring down bond yields have diminished, dealers said. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.45-6.53% Friday. The yield on the 6.33%, 2035 bond is seen at 6.49-6.56%. The 6.48%, 2035 gilt Thursday ended at INR 99.94, or 6.49% yield, while the 6.33%, 2035 bond ended at INR 98.59, or 6.53% yield.

 

OIS RATES

On Friday, swap rates are likely to track movement in US Treasury yields after the release of the long-awaited non-farm payrolls data for September, released after Indian market hours, dealers said. There are no major cues scheduled on domestic interest rates until next week's September quarter GDP data release. 

 

Traders will also track systemic liquidity and the overnight Mumbai Interbank Outright Rate, dealers said. Traders may continue to trade in swaps maturing in under a year to adjust their rate-cut bets and bet on spreads between MIBOR and money market rates. The RBI's announcement to conduct an INR-500-billion, variable rate repo auction Friday is likely to keep the weighted average call rate and the MIBOR rate capped at 5.50%. Swaps may also track the rupee's movement against the dollar and crude oil prices. The one-year swap rate is seen at 5.40-5.55% and the five-year contract is seen at 5.68-5.80%. On Thursday, the one-year rate ended at 5.46% and the five-year rate ended at 5.76%.

 

CALL

On Friday, the three-day call money rate may open near the RBI's repo rate as outflow for GST payments is expected to drain systemic liquidity, dealers said. However, due to the RBI's variable rate repo auction, rates may cool later in the day, dealers said. During the day, the three-day call money rate is seen in a range of 4.85-5.60%, dealers said. The one-day call rate ended at 5.40% Thursday.

 

RBI AUCTION

--Govt to auction two gilts worth INR 300 billion

--RBI will conduct seven-day variable rate repo auction for INR 500 billion 0930-1000 IST 

 

LIQUIDITY

Total net inflows of INR 73.09 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 60.99 billion as redemption of 364-day Treasury bills

--INR 12.10 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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