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Informist, Wednesday, Feb. 11, 2026

 

By Aaryan Khanna

 

MUMBAI – Government bond prices ended higher Wednesday tracking a fall in US Treasury yields ahead of key US jobs data due after market hours. Traders also expected the remaining supply of gilts in the financial year ending March to be easily absorbed, with only a few more auctions left before the government's borrowing calendar for Oct-Mar ends on Mar. 6, dealers said.

 

The 10-year benchmark 6.48%, 2035 gilt closed at INR 98.38, rising from INR 98.27 Tuesday. The bond's yield closed at 6.7088%, down from 6.7246% the previous day.

 

The US government will detail its economic report for January at 1900 IST. Non-farm payrolls are expected to rise by 55,000 in January from 50,000 additions the previous month, according to a Dow Jones poll. Kevin Hassett, part of the US National Economic Council, said earlier this week that the job growth numbers would be lower and shouldn't trigger "panic". Consequently, the yield on the 10-year US Treasury note was 4.14% at 1700 IST Wednesday, down from 4.18% same time Tuesday.

 

"The jobs number is moving US yields and that is moving the market here as well," a dealer at a private-sector bank said. "We'll have to look out for it, because US yields (10-year US yield) have come down from 4.25% levels over the past two days. That is putting some positivity back into the market." 

 

Traders were also more optimistic on bond prices due to the sustained surplus liquidity in the banking system, with the Reserve Bank of India's net liquidity absorbed from the banking system -- a proxy for the surplus -- rising to INR 3.37 trillion Tuesday from INR 3.11 trillion Monday. Cut-off yields on Treasury bills at the auction fell from a week ago; the 182-day and 364-day yields were lower than expected but the 91-day T-bill's cut-off was in line with an Informist poll as the government has upped its issuance in the tenor to INR 140 billion weekly for the rest of the March quarter. Until last week, the government was selling INR 90 billion of the short-term debt instrument.

 

However, the five-year benchmark 6.01%, 2030 gilt was little changed on the day. Private-sector banks and foreign portfolio investors preferred to receive the five-year overnight indexed swap rate rather than buy the five-year benchmark gilt as the bond yield was only 20 basis points more than the derivative instrument, dealers said. Investors also preferred corporate bonds and state bonds to maximise their interest income as most market participants are not enthusiastic about significant capital gains this year, they said.

 

Traders were also short selling the bond to make room for the INR 180-billion supply of the new five-year, 2031 bond being auctioned Friday. In the "WhenIssued (NewIssues)" segment of the RBI's Negotiated Dealing System-Order Matching platform, the new 2031 bond, which is likely to take over as the benchmark five-year gilt by April, was last traded at 6.3650%.

 

Instead, it was the optimism in long-term bonds since Tuesday that was aiding the 10-year benchmark gilt, dealers said. Primary dealers had expected poor demand at the state bond auction Tuesday but the nearly INR 500-billion of supply was absorbed at lower-than-expected cut-off yields. That led to aggressive short covering from traders and a sharp rise in prices of long-term bonds since Tuesday.

 

Traders had questioned the market's appetite for long-term bonds after the cut-off price on the 40-year benchmark 6.90%, 2065 gilt was sharply lower than expected at last week's auction. On Friday, the RBI had set the cut-off on the 6.90%, 2065 gilt at INR 92.53, or 7.49% yield, against INR 92.85, or 7.47% yield in an Informist poll. At the day's high Wednesday, the bond rose to the cut-off price, with traders who had unexpectedly gotten supply of the 2065 bond at the auction trimming their holdings at minimal losses.

 

"Daily there is around 2000 crores (INR 20 billion) of volume happening in that paper (6.90%, 2065 gilt), so traders would have been able to get out of it by now," a dealer at a primary dealership said. "As long as the long term bonds are in check, the market will continue to sustain risk appetite. But a repeat of what happened last week cannot happen at the 50-year (gilt's) auction this time."

 

Some traders also preferred picking up the 15-year benchmark 6.68%, 2040 gilt to maximise trading gains with gilt supply in the coming weeks to be absorbed by healthy appetite for bonds from banks and life insurers. The bond had seen a build-up of short sales in the last few days which were being unwound, dealers said. The firm investor appetite for long-term gilts was also aiding the bond's prices and traders considered its spread over the 10-year benchmark yield, of around 43 bps at Tuesday's close, as lucrative, dealers said.

 

Turnover in the gilts market Wednesday was INR 530.35 billion, similar to INR 522.10 billion Tuesday, according to data on the RBI's NDS-OM platform. There were two trades worth INR 100 million using the RBI's wholesale e-rupee pilot Wednesday, against no trades in the previous session.

 

OUTLOOK

On Thursday, bond prices may take cues from the overnight movement in US Treasury yields at the open following the release of key US economic data after the market hours on Wednesday, dealers said. Traders may avoid aggressive bets before India's CPI data for January in a new series with base year 2024 is released at 1600 IST.

 

The US added 130,000 jobs in January against 55,000 expected in a Dow Jones poll, with traders having bet on an even lower reading after comments from US officials earlier this week. The unemployment rate fell to 4.28%, the lowest since July, from 4.4% in December. However, the annual revision for labour market data showed the US added 181,000 jobs in 2025, around 400,000 lower than initially reported. After the data was released, the yield on the 10-year US Treasury note rose to 4.20% from 4.14% at 1700 IST.

 

Meanwhile, retail inflation in India likely to have risen in January mainly because of higher gold prices, with the new Consumer Price Index on the base year 2024 expected to show inflation at 2.8%, according to an Informist Poll. In the old series with the base year as 2012, retail inflation likely rose to an eight-month high of 2.5% in January from 1.33% in December, a separate Informist Poll showed. This would be the first time since August that consumer inflation returns to the Reserve Bank of India's 2-6% target band.

 

Traders do not expect further liquidity infusion from the RBI and open market operation auctions to buy bonds after the comments of central bank officials following the decision of the Monetary Policy Committee on Friday. No further rate cuts are likely to be forthcoming from the rate-setting panel in the remainder of 2026, dealers said. This is likely to keep the 10-year gilt yield in a band of 6.60-6.85% till March, they said.

 

The RBI is expected to continue buying gilts sporadically in the secondary market to signal a cap on yields, dealers said. Traders will also track the liquidity conditions in the banking system, which rose to a six-month high of INR 3.62 trillion on Friday and has remained in hefty surplus since.

 

Significant movement in the rupee and crude oil prices may also lend cues, dealers said. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.67-6.77% Thursday.

 

	WEDNESDAY		TUESDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	98.3825	6.7088%	98.2725	6.7246%
6.33%, 2035	97.5800	6.6836%	97.4400	6.7044%
6.01%, 2030	98.7275	6.3420%	98.7150	6.3451%
6.68%, 2040	96.0100	7.1266%	95.8000	7.1508%
6.90%, 2065	92.5000	7.4943%	92.1600	7.5232%

 

 

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India Gilts: Up on bets of lower-than-view US payrolls; long-term bonds surge

 

	1559 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	98.40	98.43	98.21	98.30	98.27
YTM (%)	6.7063	6.7023	6.7340	6.7207	6.7246

 

MUMBAI--1559 IST--Prices of government bonds were up, reversing a slight fall from earlier in the session, and bonds maturing in more than 10 years rose sharply, as traders bet on US non-farm payrolls for January coming in lower than estimates. The postponed January US employment report is due at 1900 IST. Economists surveyed by The Wall Street Journal expect payrolls to rise to 55,000 from 50,000 in December, with unemployment seen unchanged at 4.4%.   

 

"Globally, the data is coming slightly weaker (with respect to) on the jobs market, which is why we've seen the recent moves in global markets," a dealer at a private sector bank said. "It'll be interesting to see what today's (Wednesday's) jobs data is." The yield on the benchmark 10-year US Treasury note was 4.13%, inching lower from 4.15% at 0900 IST and 4.19% at 1700 IST Tuesday.

 

Traders covered short bets ahead of the US economic data and ahead of India's CPI inflation for January due Thursday, they said. Long-term bond investors such as insurance companies and pension funds were also likely picking up bonds, they said. Traders speculated that offshore traders were purchasing gilts and receiving fixed rate contracts in the five-year overnight indexed swap rate ahead of the US data release. As of 1559 IST, foreign portfolio investors net sold gilts worth INR 1.18 billion through the fully accessible route, according to data from Clearing Corp. of India. The five-year OIS fell to 6.14%, from the day's high of 6.16%, but remained off the day's low of 6.12% hit earlier in the session. The yield on the benchmark 10-year 6.48%, 2035 bond hit the day's low of 6.70%. However, ahead of the INR-310-billion gilt auction Friday, the yield is unlikely to sustain a fall below the key 6.70% level, dealers said. 

 

At 1559 IST, the turnover in the gilt market was INR 449.55 billion, similar to INR 448.80 billion at 1630 IST Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 10-year benchmark 6.48%, 2035 bond is seen at 6.69-6.73% for the rest of the day. (Cassandra Carvalho)

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India Gilts: Largely in thin band; rise in 5-year OIS weighs

 

	1332 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	98.24	98.35	98.21	98.30	98.27
YTM (%)	6.7300	6.7135	6.7340	6.7207	6.7246

 

MUMBAI--1332 IST--Prices of most government bonds inched lower as the five-year overnight indexed swap rate rose, dealers said. Amid a lack of major cues, bond prices were largely in a thin band Wednesday. Traders await India's CPI inflation for last month, due Thursday, and US CPI inflation for January due later in the week, for further cues on the direction of bond prices. However, positioning before the data releases is not heavy, dealers said. Traders have priced in India's CPI inflation being higher than recent prints but still below the Reserve Bank of India's 4% target. At the Monetary Policy Committee meeting outcome Friday, the RBI revised its Jan-Mar CPI inflation forecast to 3.2% from 2.9?rlier. Indian bond traders are no longer tracking US economic data as closely due to a difference in interest rate views in both countries, they said.

 

The five-year OIS rate rose to 6.16%, from a day's low of 6.12%, which was a key technical level the swap rate failed to fall below, dealers said. Bond prices fell slightly tracking the rise in OIS, and the five-year benchmark 6.01%, 2030 bond was down as traders unwound their bond swap trades. The five-year bond underperformed despite ample liquidity in the banking system since the spread between the gilt and the five-year swap had compressed too much, dealers said. Some investors also exited short-term gilts to purchase longer tenures to bet on the bond yield curve flattening, they said. The 'Others' segment of bond market participants--which consists of insurance companies, provident funds, and the RBI--net sold gilts worth INR 18.42 billion Tuesday, and net bought state bonds worth INR 83.63 billion Tuesday, according to data from Clearing Corp. of India. Traders speculated that pension funds sold short-term gilts to buy longer-term state bonds, they said. Bond prices had risen Tuesday after cut-off yields on most state bonds were lower than expectations inspite of the notified auction size being the largest since March.

 

"I've been hearing that pension funds are selling short-term, going to long-term. Because the Indian bond yield curve always has the tendency to flatten, it's a cycle and we're nearing the flattening phase again," a dealer at a state-owned bank said. "But the large banks, especially the public-sector banks are staying put in short-term (gilts), they're sitting with their hands tied." Bond traders do not see short-term bond yields rising significantly in the near-term. 

 

India's CPI inflation for January is due at 1600 IST Thursday. The statistics ministry will release CPI data for January as per the new CPI series with 2024 as the base year. Retail inflation in India likely rose to an eight-month high of 2.5% in January, based on the old CPI series with 2012 as the base year, according to an Informist poll of 11 economists. Retail inflation is seen at 2.8% in January, as per the new CPI series, according to a separate Informist poll. Bond traders are pricing in similar figures and prices are only likely to react if CPI surprises on the upside, they said. Core inflation is expected to be higher due to a rise in prices of commodities such as crude oil and gold, dealers said.

 

According to the latest data, the net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – rose to INR 3.37 trillion Tuesday from INR 3.11 trillion Monday. The ample liquidity was reflected in cut-off yields at the INR-340-billion Treasury bill auction Wednesday. The RBI set a cut-off yield of 5.32% on the 91-day T-bill, in line with an Informist poll estimate. The cut-off yields on the 182-day and 364-day T-bills were lower than estimated.

 

At 1330 IST, the turnover in the gilt market was INR 192.95 billion, lower than INR 211.90 billion at the same time Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 10-year benchmark 6.48%, 2035 bond is seen at 6.69-6.75% for the rest of the day. (Cassandra Carvalho)

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India Gilts: Steady amid lack of cues; early gains erased on profit sales

 

	0945 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	98.24	98.35	98.24	98.30	98.27
YTM (%)	6.7289	6.7135	6.7289	6.7207	6.7246

 

MUMBAI--0945 IST--Prices of government bonds were steady Wednesday after opening slightly higher, amid a lack of significant cues, dealers said. Bond prices opened up tracking an overnight fall in US Treasury yields, but gave up the gains due to profit-booking. The yield on the benchmark 10-year US Treasury note was 4.15% at 0945 IST, down from 4.19% at 1700 IST Tuesday. Japanese financial markets were shut Wednesday, so there was no cash trading of US Treasuries during Asian trade. 

 

"I personally think yesterday's (Tuesday's) buying was overdone, so after some profit-booking we'll be in a range only," a dealer at a private sector bank said. 

 

Bond prices had closed higher Tuesday, driving optimism that yields could soften in the near-term, dealers said. However, traders are not aggressively piling on to gilts due to concerns of high gilts and state bonds' supply in the coming months. The next trigger for bond prices is India's CPI inflation for January, due at 1600 IST Thursday. The statistics ministry will release CPI data for January as per the new CPI series with 2024 as the base year. Retail inflation in India likely rose to an eight-month high of 2.5% in January, based on the old CPI series with 2012 as the base year, according to an Informist poll of 11 economists. Retail inflation is seen at 2.8% in January, as per the new CPI, according to a separate Informist poll. Bond traders are pricing in similar figures, they said.

 

At 0945 IST, the turnover in the gilt market was INR 59.55 billion, higher than INR 21.10 billion at 0930 IST Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 10-year benchmark 6.48%, 2035 bond is seen at 6.69-6.75% for the rest of the day. (Cassandra Carvalho)

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India Gilts: Seen higher as US yields fall for 2nd session

 

MUMBAI – Prices of government bonds are seen opening higher Wednesday, tracking a further fall in the 10-year benchmark US Treasury yield, dealers said. On the domestic front, bond prices are seen sustaining the positive momentum seen on Tuesday, after the 10-year benchmark gilt yield fell 3 basis points. 

 

The 10-year benchmark 6.48%, 2035 bond is seen in the range of 6.68-6.77% yield Wednesday after ending at INR 98.27, or 6.72% yield Tuesday. The yield on the benchmark 10-year US Treasury note was 4.15% at 0800 IST, down from 4.19% at 1700 IST Tuesday. US yields fell for the second consecutive session, after weaker-than-expected retail sales in the US, and ahead of the postponed January US jobs report due at 1900 IST. Economists surveyed by The Wall Street Journal expect payrolls to rise to 55,000 from 50,000 in December, with unemployment seen unchanged at 4.4%.  

 

However, on the technical front, the 10-year benchmark 6.48%, 2035 bond yield is not seen sustaining a fall below the key 6.68% level in the near term, unless domestic inflation data surprises on the downside. The statistics ministry will release CPI data for January as per the new CPI series with 2024 as the base year at 1600 IST Thursday. Retail inflation in India likely rose to an eight-month high of 2.5% in January, based on the old CPI series with 2012 as the base year, according to an Informist poll of 11 economists. Retail inflation is seen at 2.8% in January, as per the new CPI, according to a separate Informist poll. Significant movement in the rupee against the dollar and the five-year overnight indexed swap rate may also lend cues to bond prices, dealers said. (Cassandra Carvalho)

 

End

 

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

 

Edited by Ashish Shirke

 

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