Informist, Wednesday, Feb 28, 2024
By Nishat Anjum
MUMBAI – Overnight indexed swap rates ended little changed as traders avoided placing aggressive bets due to caution ahead of crucial data lined up this week, dealers said. Data on US personal consumption expenditure for January and India’s GDP reading for Oct-Dec are both due on Thursday.
The one-year swap rate settled at 6.73%, against 6.74% on Tuesday. The five-year swap rate ended at 6.35%, the same as on the previous trading day.
Despite a fall in the overnight Mumbai Interbank Offer Rate–the floating leg of the OIS contract–swap rates didn’t see much movement throughout the day as traders remained on the sidelines ahead of the data, dealers said. The overnight MIBOR was set at 6.50% today, as against 6.80% on Tuesday.
“Ideally, at least the short-term swaps should have seen some movement because of overnight rates,” a dealer at a private bank said. “But then, whenever the data is due, traders would avoid taking any new bets.”
US core personal consumption and expenditure data, the US Federal Reserve’s preferred inflation gauge, for January, may lend cues to the market on the rate trajectory in the world’s largest economy, dealers said. According to a poll by Dow Jones, the core PCE index is seen rising 2.8% on year, as against 2.9% in December. On month, it is seen rising 0.4%, against 0.2% last month. Meanwhile, personal income is expected to rise 0.3% on month, the same as in December.
Rate cut expectations in the US have been pushed back to June, with 49.5% of traders expecting a cut of at least 25 basis points, according to the CME FedWatch Tool. Expectations of a rate cut in March have been almost entirely wiped out, and 22% of Fed fund futures traders expect a rate cut even at the meeting in May.
Back home, traders awaited India’s GDP growth estimates for the December quarter, due on Thursday, dealers said. A poll conducted by Informist shows India’s GDP growth for Oct-Dec is likely to have slowed down to a three-quarter low of 6.6%, mainly due to the statistical effect of a low base.
Back home, traders expect the Monetary Policy Committee to cut rates after the Fed, dealers said. As of now, the market widely expects a 25-bps rate cut in Oct-Dec, dealers said.
OUTLOOK
On Thursday, swap rates may open steady due to caution ahead of US personal consumption expenditure data for January, due at 1900 IST. A sharp movement in US Treasury yields or crude oil prices may also lend cues at opening.
The swap rate in the one-year segment is seen at 6.65-6.78%, and in the five-year segment at 6.25-6.40%.
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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. 2024. All rights reserved.
Source: Cogencis
