More Stories

Informist, Wednesday, Jul. 8, 2026

MUMBAI – Prices of government bonds and overnight indexed swap rates are seen tracking overnight developments in West Asia war and Brent crude oil prices, dealers said. Brent crude oil prices rose to a two-week-high after US President Donald Trump Wednesday said the ceasefire between the US and Iran was over. Traders will also track the overnight movement in US Treasury yields following the release of minutes of the US Federal Open Market Committee's June meeting, scheduled at 2330 IST Wednesday, dealers said. 

Speaking to reporters on the sidelines of the NATO Summit in Turkey, US President Donald Trump said late Wednesday that the US will "probably hit them (Iran) hard again tonight." "I don't want to deal with them anymore, they're scum", Trump had said earlier about Iran.

Traders also await news related to the inclusion of India's sovereign bonds into Bloomberg's flagship Global Aggregate Index, they said.

GOVERNMENT BONDS

On Thursday, bond prices will track the overnight movement in US Treasury yields after the release of minutes of the US Federal Open Market Committee's June meeting late on Wednesday. Traders are anxious to see whether US Federal Reserve Chair Kevin Warsh's commentary will be as restrictive as it was at the meeting outcome last month. Traders will also watch for developments in the US-Iran war in the Gulf and its impact on Brent crude oil prices after the fresh escalation Wednesday, dealers said. Focus will also remain on foreign inflows – both in government bonds and via the various measures the RBI had announced last month to shore up capital – and any news regarding the inclusion of Indian bonds in Bloomberg's Global Aggregate Index. Traders expect Bloomberg to publish its review between Jul. 15 and the end of the month. Most traders expect an inclusion, though some technical difficulties for FPIs purchasing bonds persist, dealers said. However, prior to Wednesday, traders had bets of the 10-year benchmark yield falling to 6.65% or below, but they now expect a broad range of 6.68% to 6.85%. On the upside, traders may step in to buy gilts at the 6.78% yield, they said. 

Traders are also likely to remain cautious ahead of the release of India's June inflation data on Monday, dealers said. The print is expected to be on the higher side, reflecting the rise in energy prices, they said. Deficient Southwest monsoon rainfall will also contribute to higher inflation, they said. The 10-year benchmark 6.94%, 2036 bond ended at INR 101.24, down from INR 101.73 Tuesday. The yield on the bond rose to 6.7636% from 6.6958% at the end of the previous session. The 10-year gilt yield rose nearly 7 basis points Wednesday, the steepest single-day jump since Apr. 2.

OIS RATES

Thursday, swap rates are seen tracking the movement of developments in West Asia overnight to gauge whether the ceasefire between the US and Iran will hold. The related movement in crude oil prices and US Treasury yields are likely to move OIS rates amid a lack of scheduled domestic rate triggers, dealers said. An escalation in the conflict is likely to lead to swap rates rising by another 10 basis points as traders price in a domestic rate hike in August or October.

The next domestic rate trigger is the release of CPI data for June Monday, which traders expect will top the RBI's medium-term target of 4%. This is the last retail inflation reading scheduled before the Monetary Policy Committee's August monetary policy review. 

Deficient rainfall and higher food prices are expected to push up retail inflation in the coming months, while the RBI is likely to drain systemic liquidity ahead of a likely rate hike cycle, dealers said. However, no rate hike is expected until December after assessing recent commentary from RBI officials, they added.

Traders await Bloomberg's decision on the inclusion of gilts in its flagship index, with most traders betting on an inclusion. Traders also expect overnight rates to ease due to a liquidity boost from inflows into foreign-currency non-resident bank deposits.

The one-year swap rate closed at 5.80%, up from 5.73% Monday. The five-year swap rate ended at 6.21%, rising from 6.12% Tuesday. The movement of the rupee could also lend cues. The one-year swap rate is seen in the range of 5.60-5.90% and the five-year at 6.05-6.23%. 

CALL

On Thursday, the one-day interbank call money rate is seen at the RBI's repo rate of 5.25% as the liquidity surplus is likely to reduce, dealers said. Traders will also gauge any liquidity drain from intervention by the RBI in the spot rupee market. However, liquidity conditions are expected to improve in the near term as foreign currency non-resident bank deposits are expected to pick up pace. Banks hedging deposits under the central bank's concessional swap window will gain rupee liquidity, potentially easing money market rates, dealers said. The RBI may avoid conducting a VRR due to maturity of the 8.33%, 2026 gilt with an outstanding of over INR 310 billion Thursday, dealers said. 

Dealers expect the call rate to be at 4.60–5.30% Thursday. The tri-party repo rate is expected to be in the 4.90–5.20% band. The weighted average call rate is expected to be in the 5.20–5.30% band, and that in the tri-party repo market is likely to be in the 5.10–5.20% band, they said. The one-day call money rate ended at 5.30%, against 5.25% Tuesday. The weighted average call rate was 5.27%, against 5.25% Tuesday.

LIQUIDITY

Total net inflows of INR 438.60 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 195.00 billion as redemption of 91-day Treasury bills

--INR 133.00 billion as redemption of 182-day Treasury bills

--INR 74.42 billion as redemption of 364-day Treasury bills

--INR 10.66 billion as coupon on state bonds
--INR 310.58 billion as redemption of 8.33%, 2026 gilt

--INR 12.94 billion as coupon on 8.33%, 2026 gilt

* Outflows

--INR 116.00 billion as payment for 91-day T-bills
--INR 93.00 billion as payment for 182-day T-bills

--INR 89.00 billion as payment for 364-day T-bills

--INR 146.00 billion as reversal of three-day variable rate repo auction

--INR 6.65 billion as reversal of overnight variable rate repo auction

End

US$1 = INR 95.56

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

Reported by Nandini Sinha

Edited by Deepshikha Bhardwaj

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.