Informist, Thursday, Sep 8, 2022

By Shubham Rana

NEW DELHI – Government bond prices ended sharply higher today, noting a fall in US Treasury yields and as crude oil prices slumped below the $90-per-barrel mark to a seven-month low, dealers said.

Moreover, investors stocked up on gilts on hopes of an imminent announcement on inclusion of domestic gilts in JPMorgan's Government Bond Index Emerging Markets, dealers said.

The most-traded 6.54%, 2032 bond settled at 95.98 rupees, or 7.14% yield, against 95.65 rupees, or 7.18% on Wednesday. The 10-year benchmark 7.26%, 2032 bond ended at 101.27 rupees, or 7.08% yield, against 100.93 rupees, or 7.13%, the previous day.

The yield on the benchmark 10-year bond ended at the lowest level since Apr 26.

"There are expectations in the market that an announcement on the index inclusion front can come as early as next week, which is keeping gilts sharply up," said a dealer at a private bank.

The yield on the 10-year 6.54%, 2032 gilt has fallen 15 basis points since Financial Times reported on Aug 26 that JPMorgan was consulting investors on India's entry into its index.

Today, most segments of the market were keen on adding to their gilt portfolios, leading to bouts of purchases from diverse market participants, dealers said.

"If there is no announcement on the index inclusion by the end of this month, there may be a sharp sell-off and yield on the 10-year could easily fall to 7.25%," said a dealer at a state-owned bank.

Investors stocked up on gilts taking cues from global factors, which turned benign overnight, dealers said.

COVID-19 curbs in China and fears of a decline in demand for fuels led to a sharp fall in the commodity to prices last seen before the beginning of the Russia-Ukraine war. Brent crude for November delivery traded under the $89-a-bbl mark today after it fell nearly 5% on Wednesday.

The yield on the 10-year US Treasury note fell 6 basis points to 3.27% on Wednesday after a publication by the US Federal Reserve said the nearly four-decade high inflation was showing signs of easing.

After the sharp rise in prices today, some traders booked profits as the yield on the new 10-year 7.26%, 2032 bond neared the crucial 7.05% level, dealers said.

During the day, government bonds came slightly off the day's highs after Monetary Policy Committee member Ashima Goyal said the repo rate needs to be raised to near neutral rate, dealers said.

"Investors were underinvested and that has led to a panic in terms of missing out on the index (inclusion) gains. There would also be a lot of churning as profits are booked and then reinvested, which enhanced the volumes," a dealer at another private bank said.

The market-wide turnover surged to 621.90 bln rupees, from 420.30 bln rupees on Wednesday, according to data on the Reserve Bank of India's Negotiated Dealing System – Order Matching platform.

Going ahead, traders will take into consideration the outcome of the European Central Bank's policy meeting and US Federal Reserve Chairman Jerome Powell's remarks on the pace of rate hikes in the US later today. The ECB is widely expected to raise rates by 75 bps.

OUTLOOK

On Friday, government bonds may open steady as traders keep to the sidelines on caution ahead of the 320-bln-rupee weekly gilt auction.

The government has offered to sell 90 bln rupees of the 7.38%, 2027 bond, 40 bln rupees of the floating rate bond 2028, 110 bln rupees of the 7.54%, 2036 bond, and 80 bln rupees of the new 2052 bond this week.

Investor appetite for bonds remains firm on hope of India's sovereign debt being included in global bond indices, with a potential announcement as early as this month, dealers said.

Any movement in US Treasury yields and crude oil prices may also lend cues at open.

The yield on the 10-year 6.54%, 2032 bond is seen at 7.10-7.18%. The yield on the new 10-year 7.26%, 2032 bond is seen 7.04-7.12%.

India Gilts:Off highs; MPC Goyal says repo rate must be near neutral

NEW DELHI--1410 IST--The prices of government bonds came off the day's highs as traders booked profits after Monetary Policy Committee member Ashima Goyal said the repo rate needs to be raised to near neutral rate, dealers said.

The yield on the most traded 10-year 6.54%, 2032 bond came down to the lowest level since Aug 5.

Goyal, while speaking at the 'Taming Inflation' conference, also said there are no second-round  effects of high CPI inflation yet in India. She also said there is no need to compress demand in the country.

"Traders have booked profits after Goyal's comments and also because of the slight rise in US yields," a dealer at a private sector bank said. "By her comments it seems that she sees terminal rate around 6%, which means another 60 bps of rate hikes."

Traders also booked profits as the yield on the new 10-year 7.26%, 2032 bond neared the crucial 7.05% level, dealers said.

Earlier in the day, bond prices surged due to an overnight fall in oil prices and US Treasury yields, with Brent crude falling to a seven-month low, dealers said.

COVID-19 curbs in China and fears of a decline in demand for fuels led to a sharp fall in the commodity to prices last seen before the beginning of the Russia-Ukraine war. Brent crude for November delivery traded under the $89-a-bbl mark in Asian trade today after it fell nearly 5% on Wednesday.

Looking ahead, traders will watch out for the outcome of the European Central Bank's policy meeting later today, at which it is expected to raise rates by 75 basis points. Remarks from US Federal Reserve Chair Jerome Powell on the pace of rate hikes in the US were also awaited after market hours, dealers said.

During the day, the yield on the most-traded 6.54%, 2032 bond is seen at 7.11-7.16%, while that on the new 10-year 7.26%, 2032 bond is seen at 7.05-7.13%.  (Shubham Rana)

India Gilts: Jump as Brent crude at 7-mo low, US yields slump Wed

NEW DELHI--0950 IST--Government bond prices jumped due to an overnight fall in oil prices and US Treasury yields, with international benchmark Brent crude falling to a seven-month low, dealers said.

COVID-19 curbs in China and fears of a decline in demand for fuels led to a sharp fall in the commodity to prices last seen before the beginning of the Russia-Ukraine war. Brent crude for November delivery traded under the $89-a-bbl mark in Asian trade today after it fell nearly 5% on Wednesday.

Moreover, the yield on the 10-year US Treasury note also fell 6 basis points to 3.27% on Wednesday after a publication by the US Federal Reserve said the nearly four-decade high inflation showed signs of easing.

Taking cues from global triggers, investors stepped up purchases, with appetite firm on the hope of an imminent announcement for the inclusion of domestic gilts in JPMorgan's Government Bond Index Emerging Markets, dealers said.

Most segments of the market were keen on adding to their gilt portfolios, causing bouts of purchases from diverse market participants, dealers said. They were of the view that profit booking was unlikely to be widespread unless sentiment was dampened by reports of a delay in the announcement into the next year.

"There's a lot of bullishness, a lot of strength in the market, primarily because of fundamentals but also from a huge fall in oil and US (Treasury) yields," a dealer at a foreign bank said.

"You must also realise that any remaining supply-demand issues will wrap up instantly for the next two calendars when the inclusion is announced," the dealer said, referring to the Centre's half-yearly borrowing calendars.

Looking ahead, traders will watch out for the outcome of the European Central Bank's policy meeting later today, at which it is expected to raise rates by 75 basis points. Remarks from US Federal Reserve Chair Jerome Powell on the pace of rate hikes in the US were also awaited after market hours, dealers said.

During the day, the yield on the most-traded 6.54%, 2032 bond is seen at 7.11-7.17%, while that on the new 10-year 7.26%, 2032 bond is seen at 7.05-7.13%. (Aaryan Khanna)

India Gilts:Seen up on index inclusion hopes, fall in crude, US ylds

NEW DELHI – Government bond prices are seen opening sharply higher due to an overnight slump in crude oil prices and US Treasury yields. Appetite for gilts remains robust on hopes Indian bonds will soon be added to global bond indices, dealers said.

Today, the yield on the 10-year 6.54%, 2032 bond is seen at 7.14-7.20% as against 7.18% on Wednesday. The yield on the new 10-year 7.26%, 2032 bond is seen at 7.09-7.15% as against 7.13% previously.

Brent crude for November delivery slumped nearly 5% to settle at $88 a bbl on Wednesday. The contract tumbled to a seven-month low as COVID-19 curbs in China raised concern about a slowing global economy, with a further fall due to a breach in technical levels.

Also, the yield on the 10-year benchmark US Treasury note fell from three-month highs to 3.27% as a US Federal Reserve report said inflation showed signs of decelerating, although high prices and labour-market tightness may impinge on growth.

Positive global cues are likely to spur prices as investor appetite for domestic bonds remains firm on hope of India's sovereign debt being included in global bond indices, with a potential announcement as early as the next few days, dealers said.

However, gains may be limited during the day as the yield on the 10-year 7.26%, 2026 bond approaches the psychologically crucial 7.10% yields, which may lead investors to book profits during the day, dealers said.  (Aaryan Khanna)

End

US$1 = 79.71 rupees

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

Edited by Ashish Shirke

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 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2022. All rights reserved.

Informist, Thursday, Sep 8, 2022

By Shubham Rana

NEW DELHI – Government bond prices ended sharply higher today, noting a fall in US Treasury yields and as crude oil prices slumped below the $90-per-barrel mark to a seven-month low, dealers said.

Moreover, investors stocked up on gilts on hopes of an imminent announcement on inclusion of domestic gilts in JPMorgan's Government Bond Index Emerging Markets, dealers said.

The most-traded 6.54%, 2032 bond settled at 95.98 rupees, or 7.14% yield, against 95.65 rupees, or 7.18% on Wednesday. The 10-year benchmark 7.26%, 2032 bond ended at 101.27 rupees, or 7.08% yield, against 100.93 rupees, or 7.13%, the previous day.

The yield on the benchmark 10-year bond ended at the lowest level since Apr 26.

"There are expectations in the market that an announcement on the index inclusion front can come as early as next week, which is keeping gilts sharply up," said a dealer at a private bank.

The yield on the 10-year 6.54%, 2032 gilt has fallen 15 basis points since Financial Times reported on Aug 26 that JPMorgan was consulting investors on India's entry into its index.

Today, most segments of the market were keen on adding to their gilt portfolios, leading to bouts of purchases from diverse market participants, dealers said.

"If there is no announcement on the index inclusion by the end of this month, there may be a sharp sell-off and yield on the 10-year could easily fall to 7.25%," said a dealer at a state-owned bank.

Investors stocked up on gilts taking cues from global factors, which turned benign overnight, dealers said.

COVID-19 curbs in China and fears of a decline in demand for fuels led to a sharp fall in the commodity to prices last seen before the beginning of the Russia-Ukraine war. Brent crude for November delivery traded under the $89-a-bbl mark today after it fell nearly 5% on Wednesday.

The yield on the 10-year US Treasury note fell 6 basis points to 3.27% on Wednesday after a publication by the US Federal Reserve said the nearly four-decade high inflation was showing signs of easing.

After the sharp rise in prices today, some traders booked profits as the yield on the new 10-year 7.26%, 2032 bond neared the crucial 7.05% level, dealers said.

During the day, government bonds came slightly off the day's highs after Monetary Policy Committee member Ashima Goyal said the repo rate needs to be raised to near neutral rate, dealers said.

"Investors were underinvested and that has led to a panic in terms of missing out on the index (inclusion) gains. There would also be a lot of churning as profits are booked and then reinvested, which enhanced the volumes," a dealer at another private bank said.

The market-wide turnover surged to 621.90 bln rupees, from 420.30 bln rupees on Wednesday, according to data on the Reserve Bank of India's Negotiated Dealing System – Order Matching platform.

Going ahead, traders will take into consideration the outcome of the European Central Bank's policy meeting and US Federal Reserve Chairman Jerome Powell's remarks on the pace of rate hikes in the US later today. The ECB is widely expected to raise rates by 75 bps.

OUTLOOK

On Friday, government bonds may open steady as traders keep to the sidelines on caution ahead of the 320-bln-rupee weekly gilt auction.

The government has offered to sell 90 bln rupees of the 7.38%, 2027 bond, 40 bln rupees of the floating rate bond 2028, 110 bln rupees of the 7.54%, 2036 bond, and 80 bln rupees of the new 2052 bond this week.

Investor appetite for bonds remains firm on hope of India's sovereign debt being included in global bond indices, with a potential announcement as early as this month, dealers said.

Any movement in US Treasury yields and crude oil prices may also lend cues at open.

The yield on the 10-year 6.54%, 2032 bond is seen at 7.10-7.18%. The yield on the new 10-year 7.26%, 2032 bond is seen 7.04-7.12%.

India Gilts:Off highs; MPC Goyal says repo rate must be near neutral

NEW DELHI--1410 IST--The prices of government bonds came off the day's highs as traders booked profits after Monetary Policy Committee member Ashima Goyal said the repo rate needs to be raised to near neutral rate, dealers said.

The yield on the most traded 10-year 6.54%, 2032 bond came down to the lowest level since Aug 5.

Goyal, while speaking at the 'Taming Inflation' conference, also said there are no second-round  effects of high CPI inflation yet in India. She also said there is no need to compress demand in the country.

"Traders have booked profits after Goyal's comments and also because of the slight rise in US yields," a dealer at a private sector bank said. "By her comments it seems that she sees terminal rate around 6%, which means another 60 bps of rate hikes."

Traders also booked profits as the yield on the new 10-year 7.26%, 2032 bond neared the crucial 7.05% level, dealers said.

Earlier in the day, bond prices surged due to an overnight fall in oil prices and US Treasury yields, with Brent crude falling to a seven-month low, dealers said.

COVID-19 curbs in China and fears of a decline in demand for fuels led to a sharp fall in the commodity to prices last seen before the beginning of the Russia-Ukraine war. Brent crude for November delivery traded under the $89-a-bbl mark in Asian trade today after it fell nearly 5% on Wednesday.

Looking ahead, traders will watch out for the outcome of the European Central Bank's policy meeting later today, at which it is expected to raise rates by 75 basis points. Remarks from US Federal Reserve Chair Jerome Powell on the pace of rate hikes in the US were also awaited after market hours, dealers said.

During the day, the yield on the most-traded 6.54%, 2032 bond is seen at 7.11-7.16%, while that on the new 10-year 7.26%, 2032 bond is seen at 7.05-7.13%.  (Shubham Rana)

India Gilts: Jump as Brent crude at 7-mo low, US yields slump Wed

NEW DELHI--0950 IST--Government bond prices jumped due to an overnight fall in oil prices and US Treasury yields, with international benchmark Brent crude falling to a seven-month low, dealers said.

COVID-19 curbs in China and fears of a decline in demand for fuels led to a sharp fall in the commodity to prices last seen before the beginning of the Russia-Ukraine war. Brent crude for November delivery traded under the $89-a-bbl mark in Asian trade today after it fell nearly 5% on Wednesday.

Moreover, the yield on the 10-year US Treasury note also fell 6 basis points to 3.27% on Wednesday after a publication by the US Federal Reserve said the nearly four-decade high inflation showed signs of easing.

Taking cues from global triggers, investors stepped up purchases, with appetite firm on the hope of an imminent announcement for the inclusion of domestic gilts in JPMorgan's Government Bond Index Emerging Markets, dealers said.

Most segments of the market were keen on adding to their gilt portfolios, causing bouts of purchases from diverse market participants, dealers said. They were of the view that profit booking was unlikely to be widespread unless sentiment was dampened by reports of a delay in the announcement into the next year.

"There's a lot of bullishness, a lot of strength in the market, primarily because of fundamentals but also from a huge fall in oil and US (Treasury) yields," a dealer at a foreign bank said.

"You must also realise that any remaining supply-demand issues will wrap up instantly for the next two calendars when the inclusion is announced," the dealer said, referring to the Centre's half-yearly borrowing calendars.

Looking ahead, traders will watch out for the outcome of the European Central Bank's policy meeting later today, at which it is expected to raise rates by 75 basis points. Remarks from US Federal Reserve Chair Jerome Powell on the pace of rate hikes in the US were also awaited after market hours, dealers said.

During the day, the yield on the most-traded 6.54%, 2032 bond is seen at 7.11-7.17%, while that on the new 10-year 7.26%, 2032 bond is seen at 7.05-7.13%. (Aaryan Khanna)

India Gilts:Seen up on index inclusion hopes, fall in crude, US ylds

NEW DELHI – Government bond prices are seen opening sharply higher due to an overnight slump in crude oil prices and US Treasury yields. Appetite for gilts remains robust on hopes Indian bonds will soon be added to global bond indices, dealers said.

Today, the yield on the 10-year 6.54%, 2032 bond is seen at 7.14-7.20% as against 7.18% on Wednesday. The yield on the new 10-year 7.26%, 2032 bond is seen at 7.09-7.15% as against 7.13% previously.

Brent crude for November delivery slumped nearly 5% to settle at $88 a bbl on Wednesday. The contract tumbled to a seven-month low as COVID-19 curbs in China raised concern about a slowing global economy, with a further fall due to a breach in technical levels.

Also, the yield on the 10-year benchmark US Treasury note fell from three-month highs to 3.27% as a US Federal Reserve report said inflation showed signs of decelerating, although high prices and labour-market tightness may impinge on growth.

Positive global cues are likely to spur prices as investor appetite for domestic bonds remains firm on hope of India's sovereign debt being included in global bond indices, with a potential announcement as early as the next few days, dealers said.

However, gains may be limited during the day as the yield on the 10-year 7.26%, 2026 bond approaches the psychologically crucial 7.10% yields, which may lead investors to book profits during the day, dealers said.  (Aaryan Khanna)

End

US$1 = 79.71 rupees

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

Edited by Ashish Shirke

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 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2022. All rights reserved.