More Stories

Informist, Thursday, Jun. 11, 2026

MUMBAI – On Friday, government bond prices and swap rates will take cues from developments in the West Asia war and consequently, Brent crude oil price, after US President Donald Trump Thursday said on social media that the US would hit Iran very hard "tonight". 

Traders will also track any development in the inclusion of Indian government bonds on Bloomberg Index Services' flagship Global Aggregate Index after the RBI and the Centre Friday unveiled a slew of measures to improve foreign inflows, dealers said. Government sources said that such measures were intended to secure the inclusion. Bloomberg, which deferred its decision on the inclusion of Indian bonds in January, said it plans to provide the next update on the potential inclusion by mid-2026. Most traders expect the review this month.

Traders await India's CPI inflation data for May, scheduled at 1600 IST Friday. Headline retail inflation is likely to have risen to a 16-month high of 4% in May, reaching the Reserve Bank of India's medium-term inflation target, according to the median in an Informist poll of 12 economists.

GOVERNMENT BONDS

At the open on Friday, gilt prices may take direction from developments in the West Asia war after Trump's comments suggested further escalation in tensions between the US and Iran, dealers said. 

Traders will also closely track the result of the INR 320-billion gilt auction Friday, dealers said. The government will sell INR 210 billion of 6.36%, 2031 gilt and INR 110 billion of the 7.71%, 2066 gilt at the auction. For the short-term paper, demand is expected from both state-owned and private sector banks for asset-liability management and held-to-maturity books amid hopes of higher inflows, dealers said. Foreign investors are also expected to be aggressive in picking up the short-term paper, dealers said. 

For the 40-year bond, insurance companies and pension funds are likely to sweep up most of the auction stock, as is usual, dealers said. However, sluggish insurance premium collections in the June quarter may hold insurers back from bidding aggressively at the auction, they added. Traders expect the supply to sail through after the MPC held the policy repo rate last week and commentary did not suggest policymakers were in a hurry to raise rates, dealers said. 

Traders may avoid large bets even after the auction result, ahead of the weekend and India's CPI inflation data. The 6.94%, 2036 bond is seen moving in a range of 6.90-6.98% range Friday. On Thursday, the 6.36%, 2031 gilt ended at INR 99.35, or 6.5205%. The new 10-year benchmark 6.94%, 2036 bond ended at INR 100.11, or 6.9240% yield. 

OIS RATES

On Friday, swap rates will continue to track crude oil prices and developments in US-Iran peace negotiations, dealers said. Swaps could tumble if a peace deal between the US and Iran is announced. 

On the monetary policy front, traders will still price in a quicker rate hike cycle in India, likely to begin as early as August due to elevated oil prices and as the monsoon is expected to be weak, stoking inflation, dealers said. A likely liquidity boost due to the RBI's measures to shore up capital could temper a rise in short-term rates, dealers said. The OIS rate curve is expected to flatten.

Traders await India's CPI inflation data for May, scheduled at 1600 IST Friday. They will also track the movement of US Treasury yields nearing the outcome of the US Federal Open Market Committee's meeting later this month, wherein status quo on interest rates is expected.

The movement of the rupee could also lend cues. The one-year swap rate is seen at 5.90-6.20% and the five-year at 6.30-6.64%. The one-year swap rate ended at 6.03% Thursday. The five-year OIS rate ended at 6.43%.

CALL

The three-day interbank call money rate on Friday is expected to open above the RBI's repo rate of 5.25% due to likely demand from primary dealerships and some banks in early trade, dealers said.

Reversal of the four-day variable rate repo auction for INR 750 billion, which was subscribed for only INR 236.80 billion, is scheduled for Friday. Most dealers expect the RBI to roll over this operation by conducting a variable rate repo auction for INR 1 trillion to INR 1.5 trillion for three days on Friday.

Dealers expect the call rate to be in the 4.70–5.40% range. The tri-party repo rate is expected to trade in a 4.90–5.30% band. The weighted average call rate is expected to be around 5.25–5.30%, and the weighted average rate in the tri-party repo market is likely to be around 5.15-5.20%, they said. 

The one-day call rate ended at 5.20% Thursday. The weighted average call rate was 5.27%. 

RBI AUCTION

--Govt to auction two gilts worth INR 320 billion on Friday

LIQUIDITY

Total net inflows of INR 135.04 billion Friday. 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 7.52 billion as coupon state bonds

--INR 40.52 billion as coupon on 8.83%, 2041

--INR 87.00 billion as coupon on 7.25%, 2063

* Outflows

--INR 236.80 billion reversal of four-day variable rate repo auction

End

US$1 = INR 95.7600

Reported by Meera Nair

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2026. All rights reserved.