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Informist, Monday, Dec. 15, 2025

NEW DELHI – Government bond prices and overnight indexed swap rates are seen tracking the overnight movement of US Treasury yields at open Tuesday. Bonds and swaps may also track the rupee's movement against the dollar. The rupee Monday fell to a record low of 90.79 a dollar intraday.

Traders will also track the result of the $5 billion dollar/rupee buy/sell swap auction, dealers said. Bond prices may also track the result of the state government bond auction Tuesday, where 10 states are scheduled to raise INR 178.50 billion.

Gilt traders will also monitor developments on the India-US trade deal and track crude oil prices for cues. Commerce Secretary Rajesh Agrawal Monday said the government is "very close" to securing a "framework" deal with the US that will help to lower Washington's 50% tariff on goods exports from India. However, Agrawal said he could not give a specific timeline for the deal to be signed.

The one-day call money rate may open near the RBI's repo rate of 5.25% on early demand for funds. Outflows for advance tax are expected to drain liquidity, dealers said. During the day, the one-day call money rate is seen in a range of 4.50-5.30%, dealers said.

GOVERNMENT BONDS

Gilt prices are expected to track the overnight movement of US Treasury yields. The rupee's movement early in the trade will also lend cues, dealers said.

Traders look forward to the open market operation auction Thursday which is expected to lend further cues to the bond prices. Before the OMO auction on Thursday, 10 states will raise INR 178.50 billion Tuesday, slightly higher than INR 176.90 billion indicated in the borrowing calendar for Oct-Dec. Demand at the auction is likely to be firm from traders as the yield spread between the gilts and state government bonds has widened from the last weekly state bond auction following a rise in yields of the state bonds, dealers said.

Traders will monitor developments on the India-US trade deal and may also track crude oil prices for cues. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.55-6.63%. The yield on the 6.33%, 2035 bond is seen at 6.56-6.64%.

On Monday, the 6.48%, 2035 bond ended at INR 99.18, or 6.59% yield, while the 6.33%, 2035 gilt ended at INR 98.18, or 6.59% yield.

OIS RATES

On Tuesday, swaps may track the overnight movement in US Treasury yields and the rupee's movement against the dollar. The domestic unit fell to a record low of 90.79 a dollar intraday Monday. Traders will also track the result of the $5 billion dollar/rupee buy/sell swap auction, dealers said.

Offshore flows may continue to drive movement in OIS rates due to lack of interest rate cues on the domestic front. Activity may continue to hold up this week but will decline in the Christmas week and heading into the new year as offshore traders close their accounts at the year-end or go on holiday, dealers said.

Traders are more focused on the CPI prints January onwards, with the RBI projecting retail inflation to average 0.6% in the December quarter. India's GDP estimate for 2025-26 (Apr-Mar) in the first week of January may also be crucial for traders to take bets on further repo rate cuts by the Monetary Policy Committee, dealers said.

Traders will monitor developments in the India-US trade deal and crude oil prices for cues. The one-year swap rate is seen at 5.40-5.55% and the five-year swap rate is seen at 5.78-6.02%. The one-year rate ended at 5.46% while the five-year rate closed at 5.90% Monday.

CALL

On Tuesday, the one-day call money rate may open near the RBI's repo rate of 5.25% on early demand for funds. Outflows for advance tax are expected to drain liquidity, dealers said. During the day, the one-day call money rate is seen moving in a 4.50-5.30% range, dealers said.

The outflows are expected to be partially offset by the RBI's bond purchases at OMO auctions, which will add INR 500 billion of liquidity on Friday, dealers said. In addition, the central bank has announced a 10-day VRR auction on Tuesday of INR 1.50 trillion, which will keep money market rates in check amid the outflows, they said. The one-day call rate ended at 5.25% Monday.

RBI AUCTION

--10 states to raise INR 178.50 billion via bond sale on Tuesday

LIQUIDITY

Total net inflows of INR 124.01 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 5.00 billion as redemption of state bonds

--INR 6.14 billion as coupon on state bonds

--INR 52.97 billion as coupon on 6.64%, 2035 gilt

--INR 5.24 billion as coupon on 6.98%, 2054 green bond

--INR 54.66 billion as coupon on 6.95%, 2061 gilt

* Outflows

--Nil

End

Reported by Shubham Rana

Edited by Ashish Shirke

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