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Informist, Tuesday, Dec. 16, 2025

NEW DELHI – Government bond prices and overnight indexed swap rates are seen tracking the overnight movement of US Treasury yields when the markets open Wednesday. Bonds and swaps may also track the rupee's movement against the dollar. The rupee Tuesday fell to a record low of 91.08 a dollar intraday.

US Treasury yields fell slightly after the release of jobs data, which showed that the US economy added 64,000 new jobs in November, higher than the Dow Jones estimate of 45,000 and up from a sharp fall of 105,000 in October. The unemployment rate rose more than expected, to 4.6% in November from 4.4% in September. The rate for October wasn't released due to the US government shutdown.

Gilt and swap traders will also monitor developments on the India-US trade deal and track crude oil prices for cues.

The one-day call money rate may open above the Reserve Bank of India's repo rate of 5.25% due to lower liquidity in the banking system. Dealers expect another variable rate repo auction Wednesday to infuse transient liquidity into the banking system. During the day, the one-day call money rate is seen moving in a range of 4.50-5.50%, dealers said.

GOVERNMENT BONDS

On Wednesday, gilts 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 bond prices. Traders will monitor developments around 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 6.52-6.63%. The yield on the 6.33%, 2035 bond is seen at 6.53-6.64%.

On Tuesday, the 6.48%, 2035 bond ended at INR 99.31, or 6.57% yield, while the 6.33%, 2035 gilt ended at INR 98.32, or 6.57% yield.

OIS RATES

On Wednesday, swaps may track the overnight movement of US Treasury yields after the release of US jobs data. Swaps may also track the rupee's movement against the dollar and its impact on dollar-rupee forward premiums.

Offshore flows are likely to 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.

On the domestic front, after India's CPI for November was largely a "non-event" for swaps, traders are more focussed 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 around the India-US trade deal and may also track 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 5.47% while the five-year rate closed at 5.90% Tuesday.

CALL

On Wednesday, the one-day call money rate may open above the RBI's repo rate of 5.25% due to lower liquidity in the banking system. Dealers expect another VRR auction Wednesday to infuse transient liquidity in the banking system. During the day, the one-day call money rate is seen moving in a 4.50-5.50% range, dealers said. The one-day call rate ended at 5.41% Tuesday.

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 70 billion on Wednesday

--RBI to auction 182-day T-bills worth INR 60 billion on Wednesday

--RBI to auction 364-day T-bills worth INR 60 billion on Wednesday

LIQUIDITY

Total net outflows of INR 4.19 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 1.67 billion as coupon on state bonds

--INR 50.89 billion as coupon on 7.57%, 2033 gilt

--INR 14.96 billion as coupon on 7.69%, 2043 gilt

--INR 49.75 billion as coupon on 6.67%, 2050 gilt

--INR 31.84 billion as coupon on 7.63%, 2059 gilt

* Outflows

--INR 153.30 billion as payment of state bonds

End

Reported by Shubham Rana

Edited by Ashish Shirke

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