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Informist, Tuesday, Aug. 11, 2026

 

By Cassandra Carvalho

 

MUMBAI – Overnight indexed swap rates ended off the day's high Tuesday as near-month Brent crude oil futures fell intraday, giving up the day's gains, dealers said. However, swaps ended higher tracking an overnight rise in US Treasury yields and crude oil price.

 

The one-year swap rate closed at 5.79%, up marginally from 5.78% Monday and off the day's high of 5.82%. The five-year swap rate settled at 6.29%, up from 6.26% in the previous session but off the day's high of 6.35%.  

 

"Market is just tracking crude now, there's some receiving at 6.30-6.32% (on five-year OIS) as hedging, but the paids (paid bets) is with crude at $90 (per barrel)," a dealer at a private-sector bank said. The yield on the 10-year US Treasury note was 4.72% as of 1700 IST, up from 4.67% at 1700 IST Monday. Nearing the end of trade, Brent crude oil futures for delivery in October fell to $87.79 per barrel, from a high of $90.03 during the day, against $84.46 at the end of swap market hours Friday. Crude oil gave up the day's gains near the end of swap market hours after Pakistan's defence minister told Bloomberg News that the US and Iran are close to "some sort of an arrangement".

 

Trade was largely by domestic participants, dealers said. Some banks chose to hedge their bond purchases by paying fixed rates in swaps. Traders remained cautious ahead of the release of inflation data in the US and in India, both due Wednesday. Some expect swap rates to be on an uptrend as inflation and US Treasury yields are seen to be high in the near term. Traders are still pricing in rate hikes due to higher inflation, even as commentary from central bank officials has indicated no urgency to raise interest rates. 

 

"People are choosing OIS over G-sec (government bonds) to go short because still G-sec is not reacting much to what's happening globally," a trader at a primary dealership said. The total notional trading volume reported on Clearing Corp. of India Ltd.'s derivatives trading platform was INR 607.50 billion, up sharply from INR 215.35 billion Monday.

 

OUTLOOK

Wednesday, swap rates will track the overnight movement of crude oil prices and US Treasury yields, dealers said. However, trade activity is seen limited by caution ahead of the release of India's CPI inflation data for July at 1600 IST. India's headline inflation is seen unchanged on month at 4.4%, according to the median of an Informist Poll of 12 economists. Core inflation is seen at 3.9% in July, as per the poll, down from 4.1% in June.

 

While headline inflation is the Reserve Bank of India's Monetary Policy Committee's target, RBI Governor Sanjay Malhotra's focus on core inflation at the policy meeting last week will also make traders track the metric closely, dealers said. Traders also await US CPI inflation for July, due after market hours Wednesday. CPI inflation in the US is seen rising 3.4% on year in July, as per a survey compiled by The Wall Street Journal.

 

Some foreign banks are still seen receiving fixed rates due to inflows through foreign currency non-resident (banks) deposits, dealers said. The movement of the rupee and overnight borrowing rates will also lend cues. The one-year swap rate is seen in the range of 5.65-6.10% and the five-year at 6.12-6.40%.

 

	At 1700 IST	MONDAY
1-year OIS	5.79%	5.78%
2-year OIS	5.99%	5.95%
5-year OIS	6.29%	6.26%
2-year MIFOR	6.86%	6.83%
5-year MIFOR	7.04%	7.01%

 

End

 

US$1 = INR 95.4350

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

 

Edited by Rajeev Pai

 

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