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Informist, Wednesday, Feb. 11, 2026

MUMBAI – Government bond prices and overnight indexed swap rates are seen taking cues from the overnight movement in US Treasury yields at open Thursday after the release of key jobs data, dealers said. Traders may avoid large bets after the recent volatility before the release of India's CPI data for January at 1600 IST Thursday. 

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 4.18% from 4.14% at 1700 IST.

Meanwhile, retail inflation in India likely rose 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 base year 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 are pricing in retail inflation in line with the Informist polls, though there is no consensus on estimates due to the new series. Gilts and swaps are only likely to react if CPI surprises on the upside, dealers said. 

Significant movement in the rupee and crude oil prices may also influence both the markets, dealers said. The one-day call rate is seen opening below the Reserve Bank of India's repo rate of 5.25% due to low demand for funds amid surplus liquidity in the banking system.

GOVERNMENT BONDS

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 gilt 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.

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.

The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.67-6.77% Thursday. On Wednesday, the bond ended at INR 98.38, or 6.71% yield.

OIS RATES

On Thursday, OIS rates may track overnight movement in US Treasury yields after the release of US non-farm payrolls for January, dealers said. Traders will be cautious in placing aggressive bets before the release of India's CPI data at 1600 IST.

Some traders expect the Overnight Mumbai Interbank Outright Rate to rise in the near term, which could push up short-term swaps, they said. However, the five-year OIS rate is seen falling to a low of 6.05-6.06% before rising again, they said, especially if the 10-year US yield remains below the key 4.20% level. 

The one-year swap rate is seen at 5.40-5.60% and the five-year at 6.03-6.25%. On Wednesday, the one-year swap rate ended at 5.52% and the five-year swap rate ended at 6.14%

CALL

On Thursday, the one-day call money rate may open below the repo rate of 5.25% due to low demand for funds amid surplus liquidity in the banking system. During the day, the call money rate is expected to move in a range of 4.25-5.15%. Rates are seen inching up by Friday as banks look to meet cash reserve requirements at the end of the reporting fortnight, dealers said.

RBI AUCTION

--Nil

LIQUIDITY

Total net outflows of INR 81.51 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 23.63 billion as coupon on state bonds

--INR 125.00 billion as redemption of 91-day Treasury bills

--INR 60.00 billion as redemption of 182-day T-bills

--INR 82.86 billion as redemption of 364-day T-bills

* Outflows

--INR 150.00 billion as payment for 91-day T-bills

--INR 126.00 billion as payment for 182-day T-bills

--INR 97.00 billion as payment for 364-day T-bills

End

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

Reported by Aaryan Khanna

Edited by Akul Nishant Akhoury

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