Home Commodity Market News India IRS Review: Steady amid muted volume on lack of firm cues

India IRS Review: Steady amid muted volume on lack of firm cues

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Informist, Thursday, Dec 29, 2022

 

By Anjali

 

MUMBAI – Overnight indexed swap rates ended steady today due to lack of significant cues on interest rates, dealers said. The volume remained low in all segments, especially the one-year segment, as the year draws to a close, dealers said. 

 

The one-year swap rate settled at 6.71% against 6.72% on Wednesday, while the five-year swap rate ended at 6.43%, flat against the previous close.

 

“There were no triggers at all today, because there are no active participants in the market,” a dealer at a primary dealership said. 

 

Trade volume also remained muted as foreign banks close their books of accounts at the end of the calendar year, which dries up liquidity due to limited counterparties for swap trades, dealers said.

 

“There was slight receiving in the OIS market as traders looked to unwind their derivative position by the end of quarter,” a dealer at a private bank said.

 

The five-year swap rate rose slightly in early trade tracking yield on the benchmark 10-year US Treasury note, which was at 3.88% early in the day, dealers said. However, there was slight receiving of fixed bets soon after, which pulled down the five-year swap rate.    

 

US Treasury yields rose for the third straight day on Wednesday and touched their highest level since November as investors assessed the rising number of COVID-19 cases in China.

 

OUTLOOK

On Friday, swap rates are seen opening steady as traders may avoid large bets due to lack of significant cues on interest rates.

 

Foreign market participants may keep to the sidelines near the year-end as they close their accounts.

 

Traders may watch out for any sharp movement in US Treasury yields and crude oil prices at open.

 

The swap rate in the one-year segment is seen at 6.65-6.80%, and the five-year at 6.35-6.55%.

 

 

At 1700 IST

 Wednesday

1-year OIS

6.71%6.72%

2-year OIS

6.46%6.46%

5-year OIS

6.43%6.43%

2-year MIFOR

6.53-6.65%6.53-6.65%

5-year MIFOR

6.76-6.88%6.74-6.86%

 

End

 

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

 

Edited by Aditya Sakorkar

 

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Source: Cogencis

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