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Informist, Wednesday, Apr. 8, 2026

MUMBAI – Government bond yields and overnight indexed swap rates will track developments in the US-Iran ceasefire and the movement of Brent crude oil prices, dealers said. Considering the decision of the Reserve Bank of India's Monetary Policy Committee Wednesday, and if oil prices fall further, yields may continue to fall as traders pare bets of rate hikes.

However, any fall in the 10-year benchmark bond yield may be limited as traders place short bets on the bond before its auction Friday. The government will sell INR 340 billion of the 6.48%, 2035 gilt Friday.

Thursday, the one-day call money rate is likely to open around 5.15% on early demand for funds. Ample liquidity in the banking system will keep rates near the RBI's Standing Deposit Facility rate for the rest of the day.

GOVERNMENT BONDS

On Thursday, bond yields will track developments in the US-Iran ceasefire and the movement of Brent crude oil prices, dealers said. Considering the policy decision Wednesday, and if oil prices fall further, yields may continue to fall as traders pare bets of rate hikes.

Traders await CPI inflation for March, due Monday, which is seen at 3.4%, according to an Informist Poll of 13 economists as the war in West Asia likely pushed fuel inflation higher. A print closer to 4.0% will once again spur bets of a quicker rate hike cycle.

After RBI Governor Sanjay Malhotra Wednesday reiterated that the central bank will continue to be pro-active and pre-emptive in liquidity management, yields may move downwards as expectations of a variable-rate reverse repo operation in the near-term fade. The 10-year benchmark yield is expected to be in the range of 6.85% to 7.03%. On Wednesday, the bond ended at INR 97.12 or 6.8984% yield.

OIS RATES

Swap rates will open tracking crude oil price movement on Thursday following overnight geopolitical developments around West Asia, dealers said. Concerns over the adherence to the ceasefire agreed to between the US and Iran Wednesday linger. Moreover, any significant movement in US Treasury yields will also lend cues to swap rates, dealers said.

After over a month of war, the US and Iran early Wednesday agreed to a two-week ceasefire in order to negotiate a definitive agreement for peace between the warring parties. Iran will open the Strait of Hormuz for two weeks. "The United States will work closely with Iran, which we have determined has gone through what will be a very productive Regime Change! There will be no enrichment of Uranium, and the United States will, working with Iran, dig up and remove all of the deeply buried (B-2 Bombers) Nuclear 'Dust'", Trump said in a post on Truth Social. Iran has already agreed to many of the 15 points of the proposed US peace plan, Trump said.

Traders await CPI inflation for March, due Monday, which is seen at 3.4% according to an Informist Poll of 13 economists, as the war in West Asia likely pushed fuel inflation higher. A print closer to 4.0% will once again spur bets of a quicker rate hike cycle, dealers said.

Traders expect the rates to fall more as the expectation of a rate hike by the MPC has ebbed. However, traders expect the five-year OIS to hover near 6.30%, as it is a key level, dealers said.

The one-year swap rate is seen at 5.70-6.05% and the five-year at 6.25-6.80% Thursday. On Wednesday, the one-year swap rate ended at 5.85% and the five-year swap rate closed at 6.31%.

CALL

Thursday, the one-day call money rate is likely to open around 5.15% on early demand for funds. Ample liquidity in the banking system will keep rates near the RBI's SDF rate throughout the day. The one-day call money rate closed at 4.75% Wednesday.

The one-day call money rate is seen at 4.75–5.15% during the day and the weighted average call rate is likely to be 5.05-5.10%. The tri-party repo rate is expected to open at 4.85-4.90%, below the RBI's SDF rate, as there are no major outflows scheduled Thursday.

RBI AUCTIONS

--Nil

LIQUIDITY

--Total net outflows of INR 142.84 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 22.16 billion as coupon on state bonds

--INR 90.00 billion as redemption of 91-day Treasury bills

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

* Outflows

--INR 195.00 billion as payment for 91-day T-bills 

--INR 60.00 billion as payment for 182-day T-bills

--INR 60.00 billion as payment for 364-day T-bills

End

US$1 = INR 92.58

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

Reported by Aaryan Khanna

Edited by Ashish Shirke

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