Informist, Friday, Dec 29, 2023
By Nishat Anjum
MUMBAI – Overnight indexed swap rates recovered from the day’s low as traders paid fixed rates tracking a rise in US Treasury yields, dealers said. During the day, traders received fixed rates on speculations of a cut in petrol and diesel prices.
The one-year swap rate settled at 6.63%, against 6.64% on Thursday. The five-year swap rate ended at 6.18%, as against 6.21% on the previous trading day. The five-year contract fell to 6.17% in early trade, while the one-year swap fell to 6.61%.
“There were some rumours of petrol price cuts. So people were punting on it, hoping that it would lead to lower inflation, and eventually rate cuts,” a dealer at a primary dealership said. “But as of now, breaking 6.19-6.20% looks difficult unless US Treasury yields move too sharply.”
On Thursday, a few media organisations, citing sources, reported that the ministry of petroleum and natural gas proposed a rate cut of around 4-8 rupees per litre for petrol and diesel in the first half of 2024.
In Oct-Dec, the one-year swap contract fell by 56 basis points, while the five-year contract fell by 66 bps. This comes in the backdrop of ease in rate view, both in the US and back home, dealers said.
In the Federal Reserve’s recent policy review meeting, Fed officials projected 75-bps rate cuts in the world’s largest economy. This led to a slump in US Treasury yields. Consequently, offshore traders received fixed rates on the swap rates, leading to a fall, dealers said.
“The way it is going, people will take the five-year swap to 6% in no time,” a dealer at a private bank said. “A lot of it is done with momentum and ease in rate view. There is an underlying bullishness in the market. That’s why people are ready to buy the rumours.”
Back home, the one-year swap rate also started factoring in a 25-bps rate cut in June, dealers said. This led to some ease in short-term swap rates as well.
Meanwhile, towards the end of trade today, traders paid fixed rates tracking a rise in US Treasury yields, dealers said. Yield on the benchmark 10-year US Treasury note rose to 3.90% from 3.84% at the time of the Indian market close on Thursday.
US Treasury yields rose as investors assessed the US jobless claim data which showed that the number of Americans filing initial claims for unemployment benefits rose last week, showing a sign of cooling off in the US labour market.
In the US, initial claims for unemployment benefits rose last week, suggesting the labour market continues to cool in the year’s last quarter.
According to the data, new state unemployment benefit claims rose by 12,000 last week to 218,000. A Reuters poll showed economists expected an increase to 210,000 initial claims for the week ended Saturday.
OUTLOOK
Swap rates are not traded on Saturdays.
On Monday, OIS rates may open steady due to a lack of significant cues for interest rates, dealers said.
A sharp move in US Treasury yields or crude oil prices may also lend cues at open.
The swap rate in the one-year segment is seen at 6.55-6.70% and in the five-year segment at 6.15-6.30%.
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Vidhi Verma
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 [email protected]
© Informist Media Pvt. Ltd. 2023. All rights reserved.
Source: Cogencis
![[Geojit Comtrade] Daily report on Natural Rubber: December 4, 2012](https://img.globalrubbermarkets.com/2024/08/geojit-comtrade-daily-report-on-natural-rubber-december-4-2012.jpg?fit=336%2C221&ssl=1)
