Home Commodity Market News India Gilts Review: 10-year yield down from 4-mo-high as US ylds fall

India Gilts Review: 10-year yield down from 4-mo-high as US ylds fall

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Informist, Tuesday, Oct 25, 2022

 

By Aaryan Khanna

 

NEW DELHI – The yield on the 10-year government bond retreated from a four-month high, tracking a slump in US Treasury yields over the long weekend, dealers said.

 

The 10-year benchmark 7.26%, 2032 bond closed at 98.73 rupees, or 7.44% yield, as against 98.26 rupees, or 7.51% yield, on Friday.

 

Indian money markets were shut on Monday for Diwali.

 

US Treasury yields fell from multi-year highs on a report that the Federal Reserve might debate a smaller interest rate hike in December, during its upcoming policy review next week.

 

While the Federal Open Market Committee is widely expected to raise rates by 75 basis points at its policy outcome on Nov 2, traders were hopeful the Fed would reduce the pace of its tightening to 50 bps in December.

 

The yield on the benchmark 10-year US Treasury note slumped to 4.18% at the end of Indian market hours today, from 4.28% at the Indian close on Friday. 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.

 

“The holiday mood is in full swing, and the market looks to be tracking US Treasury yields until at least Nov 3,” a dealer at a private bank said. 

 

Indian financial markets will be closed on Wednesday for Balipratipada.

 

During the curtailed week, banks faced low attendance and traders were wary of placing aggressive bets, leading to muted volumes, dealers said.

 

Moreover, short sellers avoided fresh bets due to a lack of gilt issuance this week.

 

Today, Informist exclusively reported, quoting a senior finance ministry official, that the cut in government’s market borrowing last month was meant to send a signal to the market that borrowing will be within the target in 2022-23 (Apr-Mar).

 

While traders continued to look at overseas cues amid a lack of significant domestic triggers, the report added to positive market sentiment, dealers said.

 

Dealers preferred adding short-term gilts to their portfolios as the US rate view eased. The actions of the US Fed were seen as a key upside risk amid a benign outlook for domestic rates following the minutes of the September Monetary Policy Committee meeting, dealers said.

 

“We have already made some money and continue to expect the spreads between the short-end and 10-year (bond yield) to increase,” a dealer at a state-owned bank said.

 

“The next move we are looking at is the spread between the 10- and 14-year gilts widening, but the market is not broad enough this week for heavy trading.”

 

According to data on RBI’s Negotiated Dealing System – Order Matching platform, the market-wide turnover stood at 175.10 bln rupees, compared with 246.20 bln rupees on Friday.

 

OUTLOOK

Money markets will be shut on Wednesday for Balipratipada.

 

On Thursday, government bond prices may open steady as traders may keep to the sidelines amid a holiday-truncated week, dealers said. 

 

Traders may take cues from any sharp movement in US Treasury yields in the period when Indian market is closed.

 

Any movement in crude oil prices may also lend cues at open.

 

Yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.40-7.48%.

 

 

Today

Friday

Price

Yield

Price

Yield

7.26%, 2032

 98.7300

 7.4424%

 98.2550

 7.5121%

7.38%, 2027

 100.1600

 7.4357%

 99.7700

 7.4357%

7.10%, 2029

 98.4950

 7.3961%

 98.0700

 7.4808%

7.54%, 2036 100.1000 7.5271% 99.6500 7.5806%6.54%, 2032 93.8750 7.4685% 93.4175 7.5406%

India Gilts: Remain sharply up as US yields slump; volume muted

 

 1320 IST  PRICE HIGH  PRICE LOW       OPEN    PREVIOUS7.26%, 2032PRICE (rupees)98.5798.6898.4098.4098.26YTM (%)      7.46627.44977.49087.49087.5121

 

MUMBAI/NEW DELHI–1320 IST–Prices of government bonds remained sharply higher as the 10-year US Treasury yield eased from multi-year highs, dealers said.

 

Gilts are taking cues from US Treasury yields amidst a lack of domestic triggers, dealers said.

 

US Treasury yields eased after a report suggested that the Federal Reserve, at its next policy meet in early November, is likely to debate on a smaller interest rate hike in December.

 

The yield on the benchmark 10-year US Treasury note slumped to 4.19% today from 4.28% at the close of Indian market hours on Friday.

 

A fall in US Treasury yields widens the interest rate differential between the safe-haven asset and emerging market debt, making the former more appealing to foreign investors.

 

“Investors are comfortable with 7.50% and above levels (on the 10-year benchmark gilt). Only some drastic change (in the interest rate view) right now would hamper the gains,” a dealer at a private bank said. 

 

Investors have already accounted for a 75-basis-point hike by the Fed in November, dealers said.

 

The trading volume is muted this week as many traders are on leave in the curtailed festival week, dealers said. Money markets will be closed on Wednesday on account of Balipratipada.

 

Traders await the result of the 272-bln-rupee state loan auction for further cues, dealers said.

 

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.43-7.50%.  (Anjali and Nishat Anjum)

India Gilts: Surge as 10-year US yield eases from multi-year highs

 

 0935 IST  PRICE HIGH  PRICE LOW       OPEN    PREVIOUS7.26%, 2032PRICE (rupees)98.6198.6598.4098.4098.26YTM (%)      7.46037.45417.49087.49087.5121

 

NEW DELHI–0935 IST–Prices of government bonds soared as the yield on the 10-year US Treasury note eased from multi-year highs, dealers said.

 

The yield on the benchmark 10-year US Treasury note came down to 4.21% in Asian trade today from 4.28% at the close of Indian market hours on Friday.

 

US Treasury yields fell from multi-year highs on view that the Federal Reserve might debate at its next meeting plans for a smaller interest rate hike in December.

 

While the Fed is widely expected to raise rates by 75 basis points at its November meeting, traders are split between a 50-bps and 75-bps hike in December.

 

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 yields have come down sharply, so this move is not a surprise,” a dealer at a private bank said. “The low volumes today are also allowing the sharp rise in prices.”

 

Trade volumes were low today as bank trading rooms have thinned out because of a truncated week, dealers said. The market will be closed on Wednesday on account of Balipratipada.

 

Traders will also keep an eye on the result of the state loan auction today, where 14 states are looking to raise 272 bln rupees through the sale of bonds, dealers said.

 

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.43-7.50%. (Shubham Rana)

India Gilts: Seen steady; fall in US yields may push prices higher

 

NEW DELHI – Prices of government bonds are expected to open steady today amid a lack of significant cues, dealers said.

 

The fall in US Treasury yields from Friday’s high may push prices of domestic gilts higher. The yield on the benchmark 10-year US Treasury note was at 4.22% in Asian trade today, down sharply from 4.28% at Friday’s close.

 

US Treasury yields fell from multi-year highs on Friday after a report suggested that the Federal Reserve is likely to debate in two weeks whether to signal plans for a smaller interest rate hike in December.

 

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.46-7.56% as against 7.51% on Friday.

 

Trade volumes may be muted today amid the low attendance at bank trading rooms because of a truncated week, dealers said. Market will be closed on Wednesday on account of Balipratipada.

 

The demand at today’s state loan auction may also be subdued as trading rooms have thinned out, dealers said. Today, 14 states are looking to raise 272 bln rupees through the sale of bonds. (Shubham Rana)

 

 

End

US$1 = 82.73 rupees

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

 

Edited by Arshad Hussain

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

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Source: Cogencis

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