More Stories

Informist, Friday, Jul. 31, 2026

By Cassandra Carvalho

MUMBAI – Overnight indexed swap rates ended off the day's lows Friday due to Brent crude oil futures rising intraday, dealers said. Risk-trimming before the weekend also led to a recovery, dealers said. Mutual funds were receiving fixed rate contracts while selling gilts earlier in the session, dealers said. 

The one-year swap rate closed at 5.92%, the same as Thursday. The five-year swap rate ended at 6.41%, against 6.42% Thursday. Brent crude oil futures for delivery in October rose to $88.19 per barrel at 1700 IST from $85.78 at 0900 IST, from $87.30 at the end of market hours Thursday. The yield on the 10-year US Treasury note was 4.69% at 1700 IST, the same at the end of market hours Thursday but up from 4.66% at 0900 IST.

"The conflicting signals are making it difficult. In the morning, we had crude come down, US rates were down but now we're seeing that go up again," a dealer at a private sector bank said. Traders were more wary of the change in macroeconomic triggers, with the 10-year US Treasury yield rising tracking the rise in crude. 

Earlier in the session, traders were exiting their bond swap trades by receiving the five-year OIS rate, and selling the five-year benchmark gilt, dealers said. However, caution ahead of the weekend in case the West Asia war escalates led to traders trimming excess received bets, they said. 

"We've heard some mutual funds selling five-year (gilt) and receiving OIS," a dealer at another private sector bank said. 

The total notional trading volume reported on Clearing Corp. of India Ltd.'s derivatives trading platform was INR 666.45 billion, higher than INR 504.60 billion Thursday.

OUTLOOK

Swaps are not traded Saturdays. On Monday, swap rates are seen rising tracking a rise in government bond yields, along with US Treasury yields and Brent crude oil prices, dealers said. The yield on the 10-year US Treasury note topped 4.74% post market hours Friday, which is likely to trigger aggressive paying by offshore participants as the interest rate differential between safe haven assets and emerging market rates narrows, making the latter less appealing. The 10-year government bond yield could rise by as much as 10 bps Monday, depending on where crude oil prices are, after Bloomberg Index Services, post market hours Friday said it deferred the inclusion of Indian government bonds in its flagship $70-trillion Global Aggregate Index. The rise in bond yields was tempered the past two months as traders priced in the possibility of an inclusion, while swap rates had risen tracking a rise in global yields. 

Traders await the decision of the RBI's Monetary Policy Committee meeting next week, with traders expecting status quo on the repo rate, though commentary could tilt towards prioritising inflation control with economic growth still seen to be strong. The RBI is unlikely to alter its forecasts on growth and inflation, with the central bank likely to flag uncertainty on the geopolitical and crop harvest front, dealers said. However, traders are bracing for a firmer policy commentary and tone with US Treasury yields and Brent crude oil prices rising, and therefore also putting pressure on the rupee. 

Receiving by banks hedging foreign currency non-resident bank deposits may cap a rise in swap rates to an extent. The movement of the rupee and overnight borrowing rates will also lend cues. The one-year swap rate is seen in the range of 5.80-6.15% and the five-year at 6.20-6.70%.

End

US$1 = INR 95.3800

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

Edited by Akul Nishant Akhoury

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.