Informist, Thursday, Dec 8, 2022

By Anjali

NEW DELHI – Prices of government bonds fell as traders made space for the fresh supply of gilts at the 280-bln-rupee weekly gilt auction Friday, erasing early gains, dealers said. 

The 10-year benchmark 7.26%, 2032 bond ended at 99.79 rupees, or 7.29% yield, as against 99.92 rupees or 7.27% yield on Wednesday.

The government will sell 120 bln rupees of the 10-year benchmark 7.26%, 2032 bond at the auction. It will also sell 70 bln rupees of the 7.38%, 2027 bond and 90 bln rupees of the 7.36%, 2052 bond.

Traders are uncertain of investor demand at the auction after underwhelming bidding prices over the past two weeks that had led to lower-than-expected cut-off prices, dealers said.

"The market momentum has weakened considering the trend over the past few auctions, so we might even be close to a devolvement if the demand keeps fading at this rate," a dealer at a foreign bank said.

Even as prices fell, traders opted not to stock up on gilts on the view they would be able to buy at cheaper prices at the debt sale. The auction result is likely to lend direction to the market that it sorely lacked even after the December policy decision on Wednesday, dealers said. 

The 35-basis-point hike by RBI's Monetary Policy Committee was in line with the market's expectations, and the committee also retained its stance on "withdrawal of accommodation".

Dealers now expect one more rate hike of 25 bps before the panel pauses rate hikes, but comments from RBI officials spurred fears that the rate cycle would be extended. The uncertainty weighed on prices of short-term gilts, particularly the five-year benchmark 7.38%, 2027 bond, which is also being auctioned, dealers said.

Gilt prices rose in early trade before the traders started trimming their holdings of the 10-year benchmark bond at the psychologically crucial 7.25% level, dealers said. 

The market sentiment was positive earlier in the day due to a sharp overnight fall in US Treasury yields and crude oil prices before reaching the key level, dealers said.

The yield on the US benchmark bond fell to a three-month low as traders expect the US Federal Reserve to go for slower rate hikes after a US labour data release. 

The yield on the 10-year US Treasury note fell by 9 basis points to 3.42% on Wednesday.

"The move in US Treasury yields didn't have as much impact because there are no buyers at these levels," a dealer at a private bank said.

Moreover, Brent crude for February delivery fell over 2% on Wednesday to $77.17 a bbl, its lowest level in almost 52 weeks after US government data showed an unexpectedly large build up in fuel stocks.

Traders avoided bets on the fall in crude as the Brent February contract recovered some losses to top $78 a bbl today, dealers said.

According to data on RBI's Negotiated Dealing System – Order Matching platform, the turnover was 220.20 bln rupees, compared with 527.15 bln rupees on Wednesday.

Meanwhile, trades aggregating 2.30 bln rupees were settled with the digital rupee pilot in 23 deals, compared with 1.50 bln rupees in 19 deals on Wednesday.

OUTLOOK

Government bond prices are seen opening steady on Friday due to caution ahead of 280-bln-rupee auction, dealers said.

The government will sell 70 bln rupees of the 7.38%, 2027 bond; 120 bln rupees of the 7.26%, 2032 bond; and 90 bln rupees of the 7.36%, 2052 bond.

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

The yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.25-7.33%.

India Gilts: Fall before weekly auction Fri, on jitters after MPC meet

MUMBAI—-1255 IST--Prices of government bonds fell as traders were wary of stocking up on gilts ahead of the 280-bln-rupee weekly auction on Friday, dealers said.

The government will sell 70 bln rupees of the 7.38%, 2027 bond; 120 bln rupees of the 7.26%, 2032 bond; and 90 bln rupees of the 7.36%, 2052 bond.

"Traders are not buying the 10-year benchmark bond around the 7.25% yield because the 10-year paper will be sold at tomorrow's (Friday's) auction," a dealer from a primary dealership said.

Some traders placed short bets to make room for the fresh supply, dealers said.

Short-term bonds fell more, led by the 2027 bond at auction, as traders were uncertain on the pace of further rate hikes after comments from Reserve Bank of India officials on Wednesday, dealers said. The lack of clarity on a pause in rate hikes would affect prices of short-term gilts more than those of longer tenures.

Earlier, gilt prices were up tracking an overnight fall in the US Treasury yields and crude oil prices, dealers said.

Yield on the benchmark 10-year US Treasury note was at 3.45%, from 3.53% at the end of Indian market hours on Wednesday. US Treasury yields fell on fears of recession mounting in the world's largest economy amid the US Federal Reserve's rate hikes.

Brent crude for February delivery fell 2% to $77.17 per barrel on Wednesday after the US reported a large build-up of fuel stocks.

Traders avoided large bets, awaiting India's CPI data for November, and decision of the US Federal Open Market Committee next week, dealers said.

According to data on the RBI's Negotiated Dealing System--Order Matching platform, the market-wide turnover at 1250 IST was 141.10 bln rupees compared with 309.30 bln rupees at 1230 IST on Wednesday.

For the rest of the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.24-7.29%.  (Kasthuri Akhil)

India Gilts: Up as US ylds, crude fall; caution before auction Fri

MUMBAI--1000 IST--Prices of government bonds rose as US Treasury yields and crude oil prices fell, but erased some gains as traders made room ahead of the weekly bond auction on Friday, dealers said.

"Last week also there was a long tail on the 14-year bond, so traders are expecting the same this time too," a dealer at a private bank said. "It's natural that people are going short on these levels before the auction."

A tail refers to a bid price at the auction that is lower than the prevailing price of the bond in the secondary market.

The government will sell 70 bln rupees of the 7.38%, 2027 bond; 120 bln rupees of the 7.26%, 2032 bond; and 90 bln rupees of the 7.36%, 2052 bond on Friday.

Dealers were of the view that the yield on the 10-year benchmark 7.26%, 2032 bond will not fall below the psychologically-crucial level of 7.25% during the day, which kept traders from aggressively stocking up on the gilt.

"It's the overall global sentiment, nobody is willing to buy right now," a dealer at a state-owned bank said.

In early trade, gilt prices took cues from positive overseas triggers, dealers said.

The yield on the 10-year US Treasury note fell by 9 basis points to 3.42% on Wednesday, and was at 3.46% in Asian trade today. The yield on the US benchmark bond fell to a three-month low as US labour data suggested the Federal Reserve could opt for a softer pace of monetary policy tightening.

Moreover, Brent crude for February delivery settled at $77.17 a bbl on Wednesday compared with $79.35 on Tuesday, falling to its lowest level in 2022.

Meanwhile, the domestic monetary policy decision was in line with market expectations. Traders now expect one more rate hike in the current financial year ending March, dealers said. The Monetary Policy Committee hiked the repo rate by 35 bps on Wednesday while retaining its stance of focusing on the withdrawal of accommodation.

According to data on the RBI's Negotiated Dealing System--Order Matching platform, the market-wide turnover at 1000 IST was 44.15 bln rupees compared with 173.80 bln rupees at 1030 IST on Wednesday.

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.15-7.35%. (Nishat Anjum)

India Gilts: Seen opening higher tracking fall in US yields, crude

NEW DELHI – Government bond prices may open higher tracking a fall in US Treasury yields and Brent crude prices after the domestic monetary policy decision was on expected lines, dealers said. 

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.23-7.28% as against 7.27% on Wednesday. 

The US Federal Reserve may need to prolong a period of tight monetary policy as it battles persistently high inflation, prompting fears of recession in the world's largest economy.

The yield on the 10-year US Treasury note fell by 9 basis points to 3.42% on Wednesday. A fall in US Treasury yields widens the interest rate differential between the safe-haven asset and emerging market debt, making the latter more appealing to foreign investors. 

Meanwhile, Brent crude for February delivery fell 3% to the lowest level in almost 52 weeks on Wednesday after US government data showed an unexpectedly large build in fuel stocks, raising concern around demand.

On the domestic front, the Reserve Bank of India's Monetary Policy Committee hiked the policy repo rate by 35 bps on Wednesday, in line with consensus estimates.

Some comments from RBI officials, particularly with regard to inflation control, weighed on gilt prices on Wednesday, but gilt prices are not likely to be influenced by the decision today, dealers said.  (Anjali)

End

US$1 = 82.42 rupees

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

Edited by Maheswaran Parameswaran

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 /+91 (11) 4220-1000

Send comments to feedback@informistmedia.com

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

Informist, Thursday, Dec 8, 2022

By Anjali

NEW DELHI – Prices of government bonds fell as traders made space for the fresh supply of gilts at the 280-bln-rupee weekly gilt auction Friday, erasing early gains, dealers said. 

The 10-year benchmark 7.26%, 2032 bond ended at 99.79 rupees, or 7.29% yield, as against 99.92 rupees or 7.27% yield on Wednesday.

The government will sell 120 bln rupees of the 10-year benchmark 7.26%, 2032 bond at the auction. It will also sell 70 bln rupees of the 7.38%, 2027 bond and 90 bln rupees of the 7.36%, 2052 bond.

Traders are uncertain of investor demand at the auction after underwhelming bidding prices over the past two weeks that had led to lower-than-expected cut-off prices, dealers said.

"The market momentum has weakened considering the trend over the past few auctions, so we might even be close to a devolvement if the demand keeps fading at this rate," a dealer at a foreign bank said.

Even as prices fell, traders opted not to stock up on gilts on the view they would be able to buy at cheaper prices at the debt sale. The auction result is likely to lend direction to the market that it sorely lacked even after the December policy decision on Wednesday, dealers said. 

The 35-basis-point hike by RBI's Monetary Policy Committee was in line with the market's expectations, and the committee also retained its stance on "withdrawal of accommodation".

Dealers now expect one more rate hike of 25 bps before the panel pauses rate hikes, but comments from RBI officials spurred fears that the rate cycle would be extended. The uncertainty weighed on prices of short-term gilts, particularly the five-year benchmark 7.38%, 2027 bond, which is also being auctioned, dealers said.

Gilt prices rose in early trade before the traders started trimming their holdings of the 10-year benchmark bond at the psychologically crucial 7.25% level, dealers said. 

The market sentiment was positive earlier in the day due to a sharp overnight fall in US Treasury yields and crude oil prices before reaching the key level, dealers said.

The yield on the US benchmark bond fell to a three-month low as traders expect the US Federal Reserve to go for slower rate hikes after a US labour data release. 

The yield on the 10-year US Treasury note fell by 9 basis points to 3.42% on Wednesday.

"The move in US Treasury yields didn't have as much impact because there are no buyers at these levels," a dealer at a private bank said.

Moreover, Brent crude for February delivery fell over 2% on Wednesday to $77.17 a bbl, its lowest level in almost 52 weeks after US government data showed an unexpectedly large build up in fuel stocks.

Traders avoided bets on the fall in crude as the Brent February contract recovered some losses to top $78 a bbl today, dealers said.

According to data on RBI's Negotiated Dealing System – Order Matching platform, the turnover was 220.20 bln rupees, compared with 527.15 bln rupees on Wednesday.

Meanwhile, trades aggregating 2.30 bln rupees were settled with the digital rupee pilot in 23 deals, compared with 1.50 bln rupees in 19 deals on Wednesday.

OUTLOOK

Government bond prices are seen opening steady on Friday due to caution ahead of 280-bln-rupee auction, dealers said.

The government will sell 70 bln rupees of the 7.38%, 2027 bond; 120 bln rupees of the 7.26%, 2032 bond; and 90 bln rupees of the 7.36%, 2052 bond.

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

The yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.25-7.33%.

India Gilts: Fall before weekly auction Fri, on jitters after MPC meet

MUMBAI—-1255 IST--Prices of government bonds fell as traders were wary of stocking up on gilts ahead of the 280-bln-rupee weekly auction on Friday, dealers said.

The government will sell 70 bln rupees of the 7.38%, 2027 bond; 120 bln rupees of the 7.26%, 2032 bond; and 90 bln rupees of the 7.36%, 2052 bond.

"Traders are not buying the 10-year benchmark bond around the 7.25% yield because the 10-year paper will be sold at tomorrow's (Friday's) auction," a dealer from a primary dealership said.

Some traders placed short bets to make room for the fresh supply, dealers said.

Short-term bonds fell more, led by the 2027 bond at auction, as traders were uncertain on the pace of further rate hikes after comments from Reserve Bank of India officials on Wednesday, dealers said. The lack of clarity on a pause in rate hikes would affect prices of short-term gilts more than those of longer tenures.

Earlier, gilt prices were up tracking an overnight fall in the US Treasury yields and crude oil prices, dealers said.

Yield on the benchmark 10-year US Treasury note was at 3.45%, from 3.53% at the end of Indian market hours on Wednesday. US Treasury yields fell on fears of recession mounting in the world's largest economy amid the US Federal Reserve's rate hikes.

Brent crude for February delivery fell 2% to $77.17 per barrel on Wednesday after the US reported a large build-up of fuel stocks.

Traders avoided large bets, awaiting India's CPI data for November, and decision of the US Federal Open Market Committee next week, dealers said.

According to data on the RBI's Negotiated Dealing System--Order Matching platform, the market-wide turnover at 1250 IST was 141.10 bln rupees compared with 309.30 bln rupees at 1230 IST on Wednesday.

For the rest of the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.24-7.29%.  (Kasthuri Akhil)

India Gilts: Up as US ylds, crude fall; caution before auction Fri

MUMBAI--1000 IST--Prices of government bonds rose as US Treasury yields and crude oil prices fell, but erased some gains as traders made room ahead of the weekly bond auction on Friday, dealers said.

"Last week also there was a long tail on the 14-year bond, so traders are expecting the same this time too," a dealer at a private bank said. "It's natural that people are going short on these levels before the auction."

A tail refers to a bid price at the auction that is lower than the prevailing price of the bond in the secondary market.

The government will sell 70 bln rupees of the 7.38%, 2027 bond; 120 bln rupees of the 7.26%, 2032 bond; and 90 bln rupees of the 7.36%, 2052 bond on Friday.

Dealers were of the view that the yield on the 10-year benchmark 7.26%, 2032 bond will not fall below the psychologically-crucial level of 7.25% during the day, which kept traders from aggressively stocking up on the gilt.

"It's the overall global sentiment, nobody is willing to buy right now," a dealer at a state-owned bank said.

In early trade, gilt prices took cues from positive overseas triggers, dealers said.

The yield on the 10-year US Treasury note fell by 9 basis points to 3.42% on Wednesday, and was at 3.46% in Asian trade today. The yield on the US benchmark bond fell to a three-month low as US labour data suggested the Federal Reserve could opt for a softer pace of monetary policy tightening.

Moreover, Brent crude for February delivery settled at $77.17 a bbl on Wednesday compared with $79.35 on Tuesday, falling to its lowest level in 2022.

Meanwhile, the domestic monetary policy decision was in line with market expectations. Traders now expect one more rate hike in the current financial year ending March, dealers said. The Monetary Policy Committee hiked the repo rate by 35 bps on Wednesday while retaining its stance of focusing on the withdrawal of accommodation.

According to data on the RBI's Negotiated Dealing System--Order Matching platform, the market-wide turnover at 1000 IST was 44.15 bln rupees compared with 173.80 bln rupees at 1030 IST on Wednesday.

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.15-7.35%. (Nishat Anjum)

India Gilts: Seen opening higher tracking fall in US yields, crude

NEW DELHI – Government bond prices may open higher tracking a fall in US Treasury yields and Brent crude prices after the domestic monetary policy decision was on expected lines, dealers said. 

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.23-7.28% as against 7.27% on Wednesday. 

The US Federal Reserve may need to prolong a period of tight monetary policy as it battles persistently high inflation, prompting fears of recession in the world's largest economy.

The yield on the 10-year US Treasury note fell by 9 basis points to 3.42% on Wednesday. A fall in US Treasury yields widens the interest rate differential between the safe-haven asset and emerging market debt, making the latter more appealing to foreign investors. 

Meanwhile, Brent crude for February delivery fell 3% to the lowest level in almost 52 weeks on Wednesday after US government data showed an unexpectedly large build in fuel stocks, raising concern around demand.

On the domestic front, the Reserve Bank of India's Monetary Policy Committee hiked the policy repo rate by 35 bps on Wednesday, in line with consensus estimates.

Some comments from RBI officials, particularly with regard to inflation control, weighed on gilt prices on Wednesday, but gilt prices are not likely to be influenced by the decision today, dealers said.  (Anjali)

End

US$1 = 82.42 rupees

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

Edited by Maheswaran Parameswaran

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 /+91 (11) 4220-1000

Send comments to feedback@informistmedia.com

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