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Mint
5 days ago
- Business
- Mint
India bonds stuck in narrow range despite rise in US peers
MUMBAI, July 8 (Reuters) - Indian government bonds traded in a narrow range early on Tuesday as markets shrugged off a rise in U.S. Treasury yields and awaited a firm domestic catalyst to drive further moves. Bond prices move inversely to yields. The yield on the benchmark 10-year bond was at 6.2943% as on 9:45 a.m. IST, after closing at 6.2933% on Monday. "There are literally no cues for traders to take the yields in any direction, so this week should see light trading," the trader said. Treasury yields rose on Monday as President Donald Trump announced tariffs on numerous trading partners, including a 25% levy on imports from Japan and South Korea beginning August 1. Yields have been on an uptrend as traders pared bets on the quantum of rate cuts by the Federal Reserve this year after jobs data for June on Thursday showed employers added more jobs than economists had forecast. Meanwhile, oil prices also rise as signs of strong demand outweighed the impact from a higher-than-expected output hike for August from Organization of the Petroleum Exporting Countries and allies. Back home, traders continue to eye the next action from the Reserve Bank of India on liquidity management, as banking system liquidity surplus continues to remain elevated, with overnight rates moving below the floor of the monetary policy corridor. RATES India's overnight index swap rates did not see any large activity, as traders eye more cues. The one-year OIS rate and the two-year OIS rate were not yet traded after ending at 5.51% and 5.48%. The liquid five-year was marginally higher at 5.69% (Reporting by Dharamraj Dhutia)
Mint
04-07-2025
- Business
- Mint
Rising Treasury yields, supply to push Indian long-term bond yields higher
MUMBAI, July 4 (Reuters) - India's long-term government bond yields are likely to move higher in early trades on Friday, tracking U.S. Treasury yields, while debt supply of long-term notes will further test investor appetite. The rise may be capped and short-term bond yields may ease after the central bank did not raise the quantum of liquidity it aims to withdraw from the banking system, as some traders had expected. The yield on the benchmark 10-year bond is expected to trade between 6.28% and 6.33%, a trader at a private bank said, after closing at 6.2875% in the previous session. The five-year 6.75% 2029 bond ended at 5.9587% on Thursday. New Delhi will sell 160 billion rupees ($1.87 billion) each of a new 15-year bond and a 40-year paper on Friday, at a time when demand for long-term bonds has not been very strong. U.S. Treasury yields rose on Thursday and ended 15 basis points higher than the lows hit earlier in the week. Yields rose after data showed the U.S. created more jobs than expected in June, supporting the Federal Reserve's patient stance on cutting interest rates. The probability of a rate cut from the Fed in July tanked to 5%, from 25% before the data, with 33% chances that the Fed maintains status quo in September as well. "People were not expecting this, and we would see a reaction in the long-end, while supply will compound the selloff," the trader said. On the other hand, the Reserve Bank of India did not raise the quantum of its seven-day variable rate reverse repo from last week, even as most were expecting a rise, and this could bode well for the shorter end of the yield curve, traders said. RATES India's overnight index swap rates are likely to see paying pressure, led by the longer-end. The one-year OIS rate ended at 5.51%, while the two-year OIS rate was at 5.46%. The liquid five-year ended at 5.65% on Thursday. KEY INDICATORS: ** Brent crude futures were 0.3% lower at $68.60 per barrel after easing 0.5% in the previous session ** Ten-year U.S. Treasury yield at 4.3400%; two-year yield at 3.8822% ** India to sell sovereign bonds worth 320 billion rupees ** RBI to set underwriting fees for 320 billion rupees of sovereign bond auction ** RBI to conduct seven-day variable rate reverse repo auction worth 1 trillion rupees ($1 = 85.4570 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Ronojoy Mazumdar)
Mint
03-07-2025
- Business
- Mint
India bond traders eye US data, RBI liquidity operation for cues
MUMBAI, July 3 (Reuters) - Indian government bond yields were largely unchanged in early deals on Thursday, as market participants awaited crucial U.S. jobs data after market hours and measures from the local central bank in response to a widening banking liquidity surplus. The yield on the benchmark 10-year bond was at 6.2830% as of 9:45 a.m. IST, after closing at 6.2892% in the previous session. The five-year 6.75% 2029 bond was at 5.9492% after ending at 5.9522% on Wednesday. "It is just a wait-and-watch game for today, before an eventful Friday," a trader with a primary dealership said. The U.S. nonfarm payroll data for June is due later in the day, and a weaker reading would boost chances of a faster pace of rate cuts from the Federal Reserve. Currently, there is a 27% probability that the Fed will reduce rates at the end of this month, according to the CME FedWatch tool, while the market has fully priced in a 25 basis point cut in September. The odds of a rate cut in July increased after U.S. private payrolls unexpectedly fell in June. Traders remain focused on the Reserve Bank of India's liquidity management policy, after it withdrew 850 billion rupees from the banking system through an operation that is due to mature on Friday. A follow-up announcement is expected after market hours, with the spotlight on whether the RBI chooses to increase the quantum of withdrawal amid a rising liquidity surplus and a plunge in overnight rates. New Delhi will sell 320 billion rupees ($3.7 billion) of bonds on Friday, with the supply of longer-term notes likely to challenge investor appetite. RATES India's overnight index swap rates were barely changed, with shallow trading volumes. The one-year and two-year OIS rates were not yet traded, while the liquid five-year was marginally lower at 5.65%. ($1 = 85.6840 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Mrigank Dhaniwala)
Mint
01-07-2025
- Business
- Mint
India bonds to see a muted start to quarter
MUMBAI, July 1 (Reuters) - Indian government bonds are expected to have a muted start to the quarter on Tuesday, as investors would await fresh cues after yields crept up in June, breaking a three-month declining streak. The yield on the benchmark 10-year bond is expected to trade between 6.31% and 6.33%, a trader at a private bank said, after closing at 6.3241% in the previous session. The five-year 6.75% 2029 bond ended at 6.0013% on Monday. Shorter-duration bonds outperformed their longer-duration counterparts for a second straight quarter in April-June, with the five-year bond yield plunging by 45 basis points, outpacing the 10-year bond yield that fell 26 bps. "Whatever we witnessed in April-June is definitely not going to be repeated, as the scenario has completely changed and the Reserve Bank of India has moved to liquidity withdrawal mode, instead of infusion," the trader said. The RBI conducted a seven-day variable rate reverse repo on Friday, withdrawing 850 billion rupees ($9.9 billion) from the banking system which contributed to pushing up overnight rates. The focus would remain on any follow-up action from the central bank this week, which will give more clarity on its comfort with liquidity and rates. Demand may also remain impacted as the government did not announce a tweak to the debt supply pattern, which some investors had anticipated. Indian states aim to borrow 2.87 trillion rupees through sale of bonds in this quarter, lower than the around 3 trillion rupees the market had expected. States sold more than 2 trillion rupees of bonds in April-June. RATES India's overnight index swap rates are likely to remain stable on Tuesday after declining in the previous quarter. The one-year OIS rate dropped 50 bps in April-June to 5.54%, while the two-year OIS rate declined 33 bps to 5.51%. The liquid five-year was at 5.71%, down 20 bps. KEY INDICATORS: ** Brent crude futures were 1.8% lower at $66.40 per barrel after easing 0.2% in the previous session ** Ten-year U.S. Treasury yield at 4.2163%; two-year yield at 3.7233% ** Indian states aim to raise 181 billion rupees via sale of bonds ($1 = 85.6610 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Ronojoy Mazumdar)
Yahoo
25-06-2025
- Business
- Yahoo
India central bank withdrawing surplus funds will dampen money market's mood
By Dharamraj Dhutia MUMBAI (Reuters) -The Indian central bank's decision to withdraw surplus liquidity from the banking system just weeks after a large rate cut and cash boosting measures has prompted an uptick in money market rates which may continue in the coming days, traders said. The Reserve Bank of India will conduct a seven-day variable rate reverse repo (VRRR), for 1 trillion rupees ($11.64 billion) on Friday, its first such operation since November-end. WHY IT'S IMPORTANT Conducting VRRRs shows the RBI's discomfort with the overnight and treasury bill rates remaining below repo rate. These are expected to move towards the repo rate as the RBI continues such operations, potentially for shorter tenors. This would increase the short-term cost of funding for banks, and undo some of the benefits of the rate cut, analysts said. Weighted average call rate, which is the RBI's operative rate, has remained near the Standing Deposit Facility (SDF) rate, for the past few weeks. CONTEXT Earlier this month, Reuters reported that the RBI could start conducting VRRRs to pump out surplus as and when required. Liquidity has averaged at around 2.76 trillion rupees on a daily basis in June, higher than 1% of banking deposits. The RBI is looking at surplus of around 1%, Governor had said. Last week, Reuters reported that RBI sought feedback on aligning call rate more closely with repo rate. GRAPHIC KEY QUOTES Money market rates are likely to get impacted with treasury bill yields moving up by 5-10 bps, said Alok Singh, group head of treasury at CSB Bank. A suitably sized daily VRRR could have been more efficient to pull up the overnight policy rates quickly, said Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership. "The focus now will be on whether RBI proactively moves to shorter tenor VRRRs, if tendering in 7-day auction is not very strong," he added. ($1 = 85.9420 Indian rupees) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
