14.8 C
New York
Sunday, October 2, 2022

India Gilts Review: Prices surge as US yields fall ahead of US CPI

Informist, Wednesday, Aug 10, 2022

 

By Shubham Rana

 

NEW DELHI – Prices of government bonds surged today in thin trade because of fall in US Treasury yields and domestic overnight indexed swap rates ahead of US CPI inflation for July at 1800 IST today, dealers said.

 

The 10-year benchmark 6.54%, 2032 bond settled at 94.81 rupees, or 7.31% yield, against 94.56 rupees, or 7.35% yield on Monday.

 

Domestic financial markets were shut Tuesday on account of Muharram.

 

The five-year OIS ended 6 basis points lower at 6.26% today.

 

“US yields have come down, so our yields have also slumped,” said a dealer at a private bank. “This week, the market will track the outcome of US CPI first and then India’s CPI on Friday.”

 

The yield on the 10-year US Treasury note fell to 2.77% today, against Tuesday’s close of 2.80%. 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.

 

US CPI inflation rate is expected to ease to 8.6-8.8% in July from a four-decade high of 9.1% in June, but remain sharply above the US Federal Reserve’s long-term average target of 2%, likely necessitating more sharp rate hikes.

 

Traders will also look at India’s CPI print for July, due after market hours on Friday. It is likely to provide the market more cues on the rate hike path of the Reserve Bank of India going forward, dealers said.

 

Traders also stocked up on gilts today as the 10-year 6.54%, 2032 bond neared the 7.35% yield level, dealers said.

 

“There was some buying as the yield on the 10-year gilt approached 7.35%, but I don’t think investors would want to accumulate gilts at these levels,” said a dealer at a state-owned bank. “The rise was gradual today and not a sharp one as US yields came down slightly throughout the day.”

 

Gilt prices rose for the first time after falling for two straight sessions. Bond prices had fallen significantly after the Monetary Policy Committee raised the repo rate by 50 basis points to 5.40%, against expectations of a rate hike of 35 bps.

 

Traders will also keep an eye out for the minutes of the RBI’s August policy review, scheduled to be published on Aug 19.

 

According to data on the RBI’s Negotiated Dealing System – Order Matching platform, the market-wide turnover was 242.35 bln rupees compared with 215.00 bln rupees on Monday.

 

OUTLOOK

On Thursday, prices of government bonds are seen taking cues from the US CPI, which is expected to ease to 8.6-8.8% in July from a four-decade high of 9.1% in June.

 

Traders may also avoid placing large bets before India’s CPI data on Friday.

 

Overnight movement in crude oil prices and US Treasury yields may also lend early cues to domestic bonds.

 

The yield on the 10-year benchmark 6.54%, 2032 bond is seen at 7.26-7.37%.

 

 

Today

Monday

Price

Yield

Price

Yield

5.74%, 2026

 95.7050

 6.9177%

 95.5900

 6.9494%

7.38%, 2027

 101.5020

 7.0066%

 101.3100

 7.0538%

7.10%, 2029

 99.5600

 7.1812%

 99.3500

 7.2214%

7.54%, 2036 100.1820 7.5165% 99.9500 7.5439%6.54%, 2032 94.8100 7.3101% 94.5600 7.3485%

India Gilts: Rise on value buying near 7.35% yield on 10-year 2032 bond

 

 1240 IST  PRICE HIGH  PRICE LOW       OPEN    PREVIOUS6.54%, 2032PRICE (rupees)94.7794.7794.5494.6894.56YTM (%)      7.31707.31637.35177.33017.3485

 

NEW DELHI-–1240 IST–Prices of government bonds rose because investors stocked up on gilts with the yield on the 10-year benchmark 6.54%, 2032 bond near the 7.35% level, dealers said.

 

Gains were, however, limited amid thin trade as traders avoided placing large bets ahead of the US CPI inflation print for July at 1800 IST, dealers said.

 

“The 7.35% yield level on the 10-year bond has found support ever since policy day, which is why it is holding up today as well,” a dealer at a private bank said. “Market should remain in this narrow range today before big data releases today and later this week.”

 

The US CPI annual inflation rate is expected to ease to 8.6-8.8% in July from a four-decade high of 9.1% in June, but remains sharply above the US Federal Reserve’s long-term average target of 2%, likely necessitating sharp rate hikes in the future as well.

 

Traders also await India CPI print for July, due Friday, for cues on the path of the rate hikes by the Reserve Bank of India going ahead, dealers said.

 

During the day, the yield on the 10-year benchmark 6.54%, 2032 bond is seen at 7.30-7.36%. (Shubham Rana)

India Gilts: Steady on caution ahead of US CPI inflation print

 

 0920 IST  PRICE HIGH  PRICE LOW       OPEN    PREVIOUS6.54%, 2032PRICE (rupees)94.5894.6894.5494.6894.56YTM (%)      7.34557.33017.35177.33017.3485

 

NEW DELHI–0920 IST–Government bond prices were steady today as traders avoided large bets on caution ahead of the US CPI inflation print for July at 1800 IST, dealers said.

 

The US CPI annual inflation rate is expected to ease to 8.8% in July from a four-decade high of 9.1% in June, but remains sharply above the US Federal Reserve’s long-term average target of 2%, likely necessitating sharp rate hikes in th future as well.

 

Traders also await India CPI print for July, due Friday, for cues on the trajectory of inflation, after the Reserve Bank of India retained its projection for retail inflation to average 6.7% in 2022-23 (Apr-Mar), dealers said.

 

Investors avoided aggressive bets but stepped up purchases of the 6.54%, 2032 bond as the 10-year benchmark yield topped the 7.35% mark amid thin trade, dealers said.

 

Gilt prices have slumped over the past two trading sessions after the Monetary Policy Committee raised the repo rate by 50 basis points to 5.40%, against expectations of a 35-bps rate hike.

 

“The market mood is slightly better at these levels, since prices have corrected,” a dealer at a primary dealership said.

 

“People are waiting for fresh inflation data to come in before they make their choice on fresh positioning. We have barely six trading days before the minutes,” the dealer said.

 

The minutes of the August policy review are scheduled to be published on Aug 19, according to the monetary policy statement.

 

During the day, the yield on the 10-year benchmark 6.54%, 2032 bond is seen at 7.32-7.38%.  (Aaryan Khanna)

India Gilts: Seen steady after volatility; US Jul CPI print in focus

 

NEW DELHI – Government bond prices are seen steady today as traders may avoid large bets after the recent volatility and ahead of the US CPI inflation print for July, scheduled to be released today after market hours.

 

Gilt prices have fallen sharply following the policy outcome on Friday, when the Monetary Policy Committee raised the repo rate by 50 basis points to 5.40%, against expectations of a 35-bps rate hike.

 

Traders may avoid further short bets as the yield on the 10-year benchmark 6.54%, 2032 bond is near the psychologically-crucial 7.35% mark, dealers said.

 

Investors focus is on the US inflation print, scheduled for release at 1800 IST, for cues on the pace of monetary policy tightening in the US, amid a lack of significant domestic triggers today, dealers said. 

 

The US CPI annual inflation rate is expected to ease to 8.8% in July from a four-decade high of 9.1% in June. The monthly rise is also expected to taper to 0.3% from 1.3% in June.

 

Investors except trade volumes to be muted, particularly as US Treasury yields and crude oil prices were in a thin band over the past two days. Indian money markets were shut for Muharram on Tuesday.

 

The yield on the 10-year benchmark 6.54%, 2032 bond is seen at 7.32-7.38% today, as against 7.35% on Monday.  (Aaryan Khanna)

 

End

 

US$1 = 79.52 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 [email protected]

 

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

Source: Cogencis

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

11,299FansLike
12,893FollowersFollow
748FollowersFollow
- Advertisement -

Latest Articles

Popular Articles