Informist, Monday, Jan 30, 2023

By Anjali and Nishat Anjum

MUMBAI/NEW DELHI – Prices of government bonds ended lower today as traders placed short bets ahead of the Union Budget, scheduled to be presented on Wednesday, as traders expect the government to announce a record-high borrowing programme, dealers said. Moreover, traders avoided aggressive bets on caution ahead of the two-day US Federal Open Market Committee meeting, which starts on Tuesday.

The 10-year benchmark 7.26%, 2032 bond ended at 99.04 rupees, or 7.40% yield, against 99.13 rupees, or 7.39% yield on Friday.

The market expects the government to eclipse the record it set for 2022-23 (Apr-Mar) by announcing a borrowing programme of 15.8 trln rupees on a gross basis, according to an Informist poll. On a net basis, the government may peg its issuance of dated securities at 11.68 trln rupees in 2023-24, up 4% from the budgeted 11.19 trln rupees in the current financial year.

"The yield (on the 10-year paper) is expected to trade around 7.33-35%, if the government announces 16 trln rupees borrowing," a dealer at a primary dealership said. "If the borrowing number goes above 16 trln, the yield (on 10-year paper) will trade around 7.35-40%."

Some dealers were of the view that traders may cover their short bets on caution before the Budget on Wednesday. "The people who placed short bets today may cover them tomorrow (Tuesday) as they might not want to go into Budget with short positions," the dealer at the primary dealership said.

Meanwhile, the rise in overnight swap rates further weighed on the gilt prices, dealers said. The five-year swap rate rose to 6.31% from Friday's close of 6.24%, largely tracking the rise in US Treasury yields. "The increase in the overnight indexed swap started weighing (on gilts)," a dealer at a state-owned bank said. "Even in the morning trade, receiving interest in swaps helped the gilts."   

US Treasury yields rose during the day as investors await the start of the US Federal Reserve's first meeting of the year on Tuesday. The yield on the benchmark 10-year US treasury note rose to 3.54% near the end of the domestic gilt market hours, from the day's low of 3.50%.

A rise in US Treasury yields narrows the interest rate differential between the safe-haven asset and emerging market debt, making the latter less appealing to foreign investors.

In the upcoming meeting of the Fed, 99.9% of futures traders expect the panel to raise the federal funds target range by 25 basis points, according to the CME FedWatch tool. In over a year, the Fed has increased its federal fund rate from almost zero to 425 bps in seven rate hikes.

According to data on the RBI's Negotiated Dealing System – Order Matching platform, the turnover today was 236.85 bln rupees, compared with 210.25 bln rupees on Friday.

Meanwhile, no trades were settled today with the digital rupee pilot.

OUTLOOK

On Tuesday, bond prices are seen steady as traders may stay on the sidelines due to lack of firm domestic cues before the Union Budget, dealers said.

Finance Minister Nirmala Sitharaman will present the Budget for 2023-24 on Wednesday.

Traders may take cues from overnight movement in US Treasury yields and crude oil prices.

The yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.35-7.45%.

India Gilts: Fall as traders place short bets ahead of FOMC, Budget

MUMBAI--1240 IST--Prices of government bonds fell as traders placed short bets ahead of the US Federal Open Market Committee's policy review and the Union Budget, both due on Wednesday. Trade volume remained low as traders were cautious ahead of key decisions, which are seen lending cues to the domestic market, dealers said.

"People are selling right now as they see the US FOMC hiking rate on expected lines and also the government may announce a borrowing programme of around 15 trln rupees," a dealer at a state-owned bank said. "The yields (on 10-year paper) might later go to 7.42-7.44% after the Budget."

According to the CME FedWatch tool, 99.9% of futures traders expect the US rate-setting panel to raise the federal funds target range by 25 basis points. Back home, on Wednesday, market participants expect the government to eclipse the record it set for 2022-23 (Apr-Mar) by announcing a borrowing programme of 15.8 trln rupees on a gross basis through dated securities, according to an Informist poll.

Prices were in a thin band earlier as the impact of a rise in US Treasury yields was offset by the fall in crude oil prices, dealers said. The yield on the benchmark 10-year US treasury note rose to 3.52% on Friday as against 3.49% on Thursday. Meanwhile, the Brent crude contract for March delivery fell to $86.54 per barrel in early trade from Friday's close of $86.66 per bbl.

According to data on the Reserve Bank of India's Negotiated Dealing System--Order Matching platform--market-wide turnover was 91.55 bln rupees at 1240 IST, compared with 99.05 bln rupees at 1235 IST on Friday.

For the rest of the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.38-7.42%. (Kasthuri Akhil)

India Gilts: In thin band on caution ahead of Fed meet, Union Budget

NEW DELHI--0950--Prices of government bonds traded in a thin band as traders avoided placing large bets ahead of the US Federal Open Market Committee's meeting and the Union Budget, both due this week, dealers said. Further, the impact of a rise in US Treasury yields was offset by the fall in crude oil prices.

"The market will trade around the current levels only and the volume will also remain low," a dealer at a state-owned bank said. "Traders will continue to stay on the sidelines ahead of the FOMC (meeting) and Budget." 

The yield on the benchmark 10-year US treasury note rose to 3.52% on Friday as against 3.49% on Thursday. The yield ended higher after data showed inflation in Japan was surprisingly on the higher side and following the release of the US personal consumption expenditures index, the Federal Reserve's favoured inflation measure, which was in line with expectations.

However, the rise in treasury yields was offset by a fall in crude. The Brent crude contract for March delivery fell to $86.54 per barrel from Friday's close of $86.66 per bbl. Crude oil prices fell on indications of strong Russian oil supply, which offset better-than-expected US economic growth data and hopes of a rapid recovery in Chinese demand.

On Tuesday, the US Federal Reserve will begin its two-day meeting, where it is largely expected to increase the federal funds rate by 25 basis points. According to the CME FedWatch tool, 99.6% of futures traders expect the rate-setting panel to hike the federal funds target range by 25 basis points, while the outliers expect a repeat of the 50-bps hike announced in December.

On Wednesday, Finance Minister Nirmala Sitharaman will present the Union Budget in the Parliament. Market participants expect the government to eclipse the record it set for 2022-23 (Apr-Mar) by announcing a borrowing programme of 15.8 trln rupees on a gross basis through dated securities, according to an Informist poll. For 2022-23, the government is scheduled to borrow 14.21 trln rupees through the sale of dated securities.

According to data on the Reserve Bank of India's Negotiated Dealing System--Order Matching platform--the marketwide turnover was 3.70 bln rupees at 0935 IST, compared with 21.55 bln rupees at the same time on Friday.

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.34-7.44% as against 7.39% on Friday. (Anjali)

India Gilts:Seen down on rise in US ylds; FOMC meet, Budget in focus

MUMBAI – Government bond prices are seen opening a tad lower tracking a rise in the US Treasury yields on Friday. However, traders may avoid placing large bets ahead of the US Federal Open Market Committee meeting and the Union Budget this week, dealers said.

Today, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.34-7.44% as against 7.39% on Friday.

Yield on the benchmark 10-year US treasury note rose to 3.52% on Friday as against 3.49% on Thursday. A rise in US Treasury yields narrows the interest rate differential between the safe-haven asset and emerging market debt, making the latter less appealing to foreign investors.

US Treasury yields ended higher on Friday after data showed inflation in Japan was surprisingly on the higher side and following the release of the Federal Reserve's favoured inflation measure, the personal consumption expenditures index, which was in line with expectations.

Japan's core consumer price index rose 4% on year in December, the fastest pace since 1981. Meanwhile, the US consumer price index report was in line with market expectations, showing that prices of goods and services fell by 0.1% in December on a monthly basis.

The Fed is scheduled to begin its two-day meeting on Tuesday. It is largely expected to increase the federal funds rate by 25 basis points.

On the domestic front, the weak demand at 300-bln-rupee auction on Friday may dent the market sentiment, dealers said. Traders may be cautious of stocking up on gilts days before the Budget, wherein the government is expected to announce a borrowing programme of 15.8 trln rupees on a gross basis through dated securities, according to an Informist poll. For 2022-23 (Apr-Mar), the government is scheduled to borrow 14.21 trln rupees through the sale of dated securities.  (Nishat Anjum) 

End

US$1 = 81.50 rupees

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

Edited by Aditya Sakorkar

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. 2023. All rights reserved.

Informist, Monday, Jan 30, 2023

By Anjali and Nishat Anjum

MUMBAI/NEW DELHI – Prices of government bonds ended lower today as traders placed short bets ahead of the Union Budget, scheduled to be presented on Wednesday, as traders expect the government to announce a record-high borrowing programme, dealers said. Moreover, traders avoided aggressive bets on caution ahead of the two-day US Federal Open Market Committee meeting, which starts on Tuesday.

The 10-year benchmark 7.26%, 2032 bond ended at 99.04 rupees, or 7.40% yield, against 99.13 rupees, or 7.39% yield on Friday.

The market expects the government to eclipse the record it set for 2022-23 (Apr-Mar) by announcing a borrowing programme of 15.8 trln rupees on a gross basis, according to an Informist poll. On a net basis, the government may peg its issuance of dated securities at 11.68 trln rupees in 2023-24, up 4% from the budgeted 11.19 trln rupees in the current financial year.

"The yield (on the 10-year paper) is expected to trade around 7.33-35%, if the government announces 16 trln rupees borrowing," a dealer at a primary dealership said. "If the borrowing number goes above 16 trln, the yield (on 10-year paper) will trade around 7.35-40%."

Some dealers were of the view that traders may cover their short bets on caution before the Budget on Wednesday. "The people who placed short bets today may cover them tomorrow (Tuesday) as they might not want to go into Budget with short positions," the dealer at the primary dealership said.

Meanwhile, the rise in overnight swap rates further weighed on the gilt prices, dealers said. The five-year swap rate rose to 6.31% from Friday's close of 6.24%, largely tracking the rise in US Treasury yields. "The increase in the overnight indexed swap started weighing (on gilts)," a dealer at a state-owned bank said. "Even in the morning trade, receiving interest in swaps helped the gilts."   

US Treasury yields rose during the day as investors await the start of the US Federal Reserve's first meeting of the year on Tuesday. The yield on the benchmark 10-year US treasury note rose to 3.54% near the end of the domestic gilt market hours, from the day's low of 3.50%.

A rise in US Treasury yields narrows the interest rate differential between the safe-haven asset and emerging market debt, making the latter less appealing to foreign investors.

In the upcoming meeting of the Fed, 99.9% of futures traders expect the panel to raise the federal funds target range by 25 basis points, according to the CME FedWatch tool. In over a year, the Fed has increased its federal fund rate from almost zero to 425 bps in seven rate hikes.

According to data on the RBI's Negotiated Dealing System – Order Matching platform, the turnover today was 236.85 bln rupees, compared with 210.25 bln rupees on Friday.

Meanwhile, no trades were settled today with the digital rupee pilot.

OUTLOOK

On Tuesday, bond prices are seen steady as traders may stay on the sidelines due to lack of firm domestic cues before the Union Budget, dealers said.

Finance Minister Nirmala Sitharaman will present the Budget for 2023-24 on Wednesday.

Traders may take cues from overnight movement in US Treasury yields and crude oil prices.

The yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.35-7.45%.

India Gilts: Fall as traders place short bets ahead of FOMC, Budget

MUMBAI--1240 IST--Prices of government bonds fell as traders placed short bets ahead of the US Federal Open Market Committee's policy review and the Union Budget, both due on Wednesday. Trade volume remained low as traders were cautious ahead of key decisions, which are seen lending cues to the domestic market, dealers said.

"People are selling right now as they see the US FOMC hiking rate on expected lines and also the government may announce a borrowing programme of around 15 trln rupees," a dealer at a state-owned bank said. "The yields (on 10-year paper) might later go to 7.42-7.44% after the Budget."

According to the CME FedWatch tool, 99.9% of futures traders expect the US rate-setting panel to raise the federal funds target range by 25 basis points. Back home, on Wednesday, market participants expect the government to eclipse the record it set for 2022-23 (Apr-Mar) by announcing a borrowing programme of 15.8 trln rupees on a gross basis through dated securities, according to an Informist poll.

Prices were in a thin band earlier as the impact of a rise in US Treasury yields was offset by the fall in crude oil prices, dealers said. The yield on the benchmark 10-year US treasury note rose to 3.52% on Friday as against 3.49% on Thursday. Meanwhile, the Brent crude contract for March delivery fell to $86.54 per barrel in early trade from Friday's close of $86.66 per bbl.

According to data on the Reserve Bank of India's Negotiated Dealing System--Order Matching platform--market-wide turnover was 91.55 bln rupees at 1240 IST, compared with 99.05 bln rupees at 1235 IST on Friday.

For the rest of the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.38-7.42%. (Kasthuri Akhil)

India Gilts: In thin band on caution ahead of Fed meet, Union Budget

NEW DELHI--0950--Prices of government bonds traded in a thin band as traders avoided placing large bets ahead of the US Federal Open Market Committee's meeting and the Union Budget, both due this week, dealers said. Further, the impact of a rise in US Treasury yields was offset by the fall in crude oil prices.

"The market will trade around the current levels only and the volume will also remain low," a dealer at a state-owned bank said. "Traders will continue to stay on the sidelines ahead of the FOMC (meeting) and Budget." 

The yield on the benchmark 10-year US treasury note rose to 3.52% on Friday as against 3.49% on Thursday. The yield ended higher after data showed inflation in Japan was surprisingly on the higher side and following the release of the US personal consumption expenditures index, the Federal Reserve's favoured inflation measure, which was in line with expectations.

However, the rise in treasury yields was offset by a fall in crude. The Brent crude contract for March delivery fell to $86.54 per barrel from Friday's close of $86.66 per bbl. Crude oil prices fell on indications of strong Russian oil supply, which offset better-than-expected US economic growth data and hopes of a rapid recovery in Chinese demand.

On Tuesday, the US Federal Reserve will begin its two-day meeting, where it is largely expected to increase the federal funds rate by 25 basis points. According to the CME FedWatch tool, 99.6% of futures traders expect the rate-setting panel to hike the federal funds target range by 25 basis points, while the outliers expect a repeat of the 50-bps hike announced in December.

On Wednesday, Finance Minister Nirmala Sitharaman will present the Union Budget in the Parliament. Market participants expect the government to eclipse the record it set for 2022-23 (Apr-Mar) by announcing a borrowing programme of 15.8 trln rupees on a gross basis through dated securities, according to an Informist poll. For 2022-23, the government is scheduled to borrow 14.21 trln rupees through the sale of dated securities.

According to data on the Reserve Bank of India's Negotiated Dealing System--Order Matching platform--the marketwide turnover was 3.70 bln rupees at 0935 IST, compared with 21.55 bln rupees at the same time on Friday.

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.34-7.44% as against 7.39% on Friday. (Anjali)

India Gilts:Seen down on rise in US ylds; FOMC meet, Budget in focus

MUMBAI – Government bond prices are seen opening a tad lower tracking a rise in the US Treasury yields on Friday. However, traders may avoid placing large bets ahead of the US Federal Open Market Committee meeting and the Union Budget this week, dealers said.

Today, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.34-7.44% as against 7.39% on Friday.

Yield on the benchmark 10-year US treasury note rose to 3.52% on Friday as against 3.49% on Thursday. A rise in US Treasury yields narrows the interest rate differential between the safe-haven asset and emerging market debt, making the latter less appealing to foreign investors.

US Treasury yields ended higher on Friday after data showed inflation in Japan was surprisingly on the higher side and following the release of the Federal Reserve's favoured inflation measure, the personal consumption expenditures index, which was in line with expectations.

Japan's core consumer price index rose 4% on year in December, the fastest pace since 1981. Meanwhile, the US consumer price index report was in line with market expectations, showing that prices of goods and services fell by 0.1% in December on a monthly basis.

The Fed is scheduled to begin its two-day meeting on Tuesday. It is largely expected to increase the federal funds rate by 25 basis points.

On the domestic front, the weak demand at 300-bln-rupee auction on Friday may dent the market sentiment, dealers said. Traders may be cautious of stocking up on gilts days before the Budget, wherein the government is expected to announce a borrowing programme of 15.8 trln rupees on a gross basis through dated securities, according to an Informist poll. For 2022-23 (Apr-Mar), the government is scheduled to borrow 14.21 trln rupees through the sale of dated securities.  (Nishat Anjum) 

End

US$1 = 81.50 rupees

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

Edited by Aditya Sakorkar

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. 2023. All rights reserved.