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Business Recorder
25-07-2025
- Business
- Business Recorder
India bonds drop to 11-week low as RBI commentary adds to bearish cues
MUMBAI: Indian government bonds fell on Friday, as hawkish commentary from India's central bank governor, coupled with higher U.S. Treasury yields and oil prices, curbed appetite for debt. The yield on the benchmark 10-year bond ended over 2 basis points higher at 6.3505%, the highest since May 9, compared with a previous close of 6.3276%. Bond yields move inversely to prices. Traders pared positions after the weekly debt auction, as a slew of negative cues soured sentiment. 'While the auction was subscribed fully, there is no further incentive for fresh buying as rising U.S. yields, oil prices anddeclining rupee are all negative for bonds,' said Debendra Kumar Dash, senior vice president of treasury at AU Small Finance Bank. The 10-year U.S. Treasury yield was at 4.4117% in Asian hours, up over 8 basis points from Tuesday's low of 4.33%. Meanwhile, oil prices rose 0.23% to $69.34 per barrel. The central bank governor's fireside chat at a Financial Express event also curbed expectations for rate easing, traders said, prompting those who were betting on an August cut to pare positions. India bonds end steady as lack of cues continue to dominate Malhotra said monetary policy, being forward-looking, will place greater focus on the outlook for growth and inflation, rather than their current levels, when the policy panel meets on August 6. With retail inflation falling to a six-year low and likely to hit a record low in July, calls for at least one more rate cut had ramped up. Malhotra added that the bar for further easing is higher than it would have been if the stance was accommodative, though the central bank still has the flexibility to move the rates up, down or pause. Rates India's overnight index swap rates rose due to high paying pressure as traders unwound earlier receiving positions. The one-year OIS rate ended 3 basis points higher at 5.53% and the two-year OIS rate rose nearly 5 bps to 5.51%. The liquid five-year OIS rate also rose 5 bps to 5.73%.
Business Recorder
01-07-2025
- Business
- Business Recorder
India bond yields dip, tracking US Treasury peers, oil prices
MUMBAI: Indian government bond yields eased on Tuesday, in line with their U.S. Treasury peers and lower oil prices, while elevated liquidity levels further supported the market. The yield on the benchmark 10-year note ended at 6.2927%, compared with the previous close of 6.3241%. The 10-year U.S. Treasury yield fell to 4.1929% in Asian hours, its lowest level in 2 months, versus the previous close of 4.2260%. Oil prices remained subdued and was last at $67.27 per barrel, about $11 lower than June's high of $78.85 per barrel. 'People are taking a view at the start of the quarter, with some building positions as the U.S. yields and oil prices have fallen,' said Debendra Kumar Dash, senior vice president of treasury at AU Small Finance Bank. 'Ample liquidity in the system is also providing comfort, so some investment demand has emerged.' India's daily average banking system liquidity surplus rose to 2.74 trillion rupees in June, marking its highest level in three years. Traders are now awaiting cues on the Reserve Bank of India's liquidity moves after it conducted a seven-day variable rate reverse repo (VRRR) auction on Friday, withdrawing 850 billion rupees from the banking system. The weighted average call rate rose to 5.50% on Monday, reaching the central bank's policy rate for the first time in the financial year. Weighted average TREPS rate also rose to 5.42%. Foreign investors also stepped up purchases in the second half of June, offsetting the majority of the selling in the first half. They had net sold over 130 billion rupees in bonds by June 18, but the figure narrowed to 7.2 billion rupees for the month, CCIL data showed. Rates India's overnight index swap rates saw receiving bias on Tuesday, with the longer-duration rates leading the fall. The one-year OIS rate dropped 1 basis point to 5.52%, while the two-year OIS rate declined 2 bps to 5.49%, and the most liquid five-year dropped 4 basis points to 5.67%.
Business Recorder
03-06-2025
- Business
- Business Recorder
Indian bonds flat ahead of state debt supply, RBI policy decision
MUMBAI: Indian government bonds traded in a tight range in early deals on Tuesday, as investors awaited the state debt supply expected later in the day, and the central bank's monetary policy decision due later this week. The yield on the new benchmark 10-year bond was at 6.2171% as of 10:20 a.m. IST, compared with the previous close of 6.2144%. Bond yields move inversely to prices. 'The higher-than-expected GDP number toned down future rate cuts expectations in the market, and we're now waiting to hear from the horse's mouth (the central bank) for further direction,' said Debendra Kumar Dash, senior vice president of treasury at AU Small Finance Bank. India's gross domestic product (GDP) surged 7.4% in the January-March quarter, much faster than the forecast of 6.7% in a Reuters poll. The Reserve Bank of India is widely expected to cut rates by at least 25 basis points in its monetary policy decision due on June 6, with the focus also on the Governor's commentary to gauge the central bank's rate easing trajectory. India bond yields resume decline as all eyes on RBI decision this week State Bank of India, however, believes there should be a 50-basis-point cut to reinvigorate the credit cycle. India's widening liquidity surplus supported the sentiment, with the daily average surplus at its highest level since July 2022. In May, the daily average surplus stood at nearly 1.71 trillion rupees, more than 20% higher than April. Meanwhile, Indian states are set to sell bonds worth 294 billion rupees ($3.44 billion) later in the day, the highest quantum since the start of the financial year. Rates Volumes in overnight index swaps (OIS) were muted in early trading, and the rates are expected to remain range-bound during the day, traders said. The one-year OIS rate was yet to be traded, while the two-year OIS rate was down 1 basis point at 5.44% The most liquid five-year was slightly lower at 5.65%.
The Sun
13-05-2025
- Business
- The Sun
Indian rupee, bonds poised to rally on ceasefire with Pakistan
MUMBAI: The Indian rupee and bonds are expected to soar this week after a truce was reached and held between nuclear-armed rivals India and Pakistan following the worst clashes between them in nearly three decades. Indian share benchmarks jumped nearly 4% on Monday to log their best day in four years after a ceasefire was announced over the weekend. The rupee and bond markets were closed for a local holiday. Global equities also soared after the U.S. and China reached a deal to slash reciprocal tariffs. The Chinese yuan hit a six-month high while the dollar index rose 1% on easing fears of a damaging trade war between the world's two largest economies. The rupee is set to recoup last week's losses, which were spurred by an intensification of the India-Pakistan conflict and the currency is likely to benefit from a stronger yuan as well, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities. The rupee closed at 85.37 against the U.S. dollar on Friday, falling 0.9% in that week. Traders expect the rupee to strengthen past the 85 mark while encountering resistance around 84.60 and 84.40 levels. Meanwhile, Indian government bond yields are expected to ease back to levels seen before the India-Pakistan conflict flared up last week. The yield on the 10-year benchmark bond rose to a high of 6.44% before closing at 6.37% on Friday. The ceasefire has calmed wary investors, who are likely to resume building positions after the major selloff, traders said. The yield on the benchmark 10-year bond is expected to trade between 6.30% and 6.33% this week, a trader at a private bank said, with a focus on inflation data, the central bank's debt purchase and an auction. 'U.S.-China trade agreement is also a positive for bonds as it is good for the rupee and will further support sentiment,' said Debendra Kumar Dash, senior vice president of treasury at AU Small Finance Bank. India's consumer inflation data for April is due on Tuesday. Economists polled by Reuters expect the key price gauge to have declined to a near six-year low of 3.27%. The Reserve Bank of India is scheduled to purchase 250 billion rupees ($2.95 billion) of bonds on Thursday and New Delhi will sell bonds worth 250 billion rupees on Friday.
The Sun
13-05-2025
- Business
- The Sun
Rupee, bonds to rise after India-Pakistan ceasefire
MUMBAI: The Indian rupee and bonds are expected to soar this week after a truce was reached and held between nuclear-armed rivals India and Pakistan following the worst clashes between them in nearly three decades. Indian share benchmarks jumped nearly 4% on Monday to log their best day in four years after a ceasefire was announced over the weekend. The rupee and bond markets were closed for a local holiday. Global equities also soared after the U.S. and China reached a deal to slash reciprocal tariffs. The Chinese yuan hit a six-month high while the dollar index rose 1% on easing fears of a damaging trade war between the world's two largest economies. The rupee is set to recoup last week's losses, which were spurred by an intensification of the India-Pakistan conflict and the currency is likely to benefit from a stronger yuan as well, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities. The rupee closed at 85.37 against the U.S. dollar on Friday, falling 0.9% in that week. Traders expect the rupee to strengthen past the 85 mark while encountering resistance around 84.60 and 84.40 levels. Meanwhile, Indian government bond yields are expected to ease back to levels seen before the India-Pakistan conflict flared up last week. The yield on the 10-year benchmark bond rose to a high of 6.44% before closing at 6.37% on Friday. The ceasefire has calmed wary investors, who are likely to resume building positions after the major selloff, traders said. The yield on the benchmark 10-year bond is expected to trade between 6.30% and 6.33% this week, a trader at a private bank said, with a focus on inflation data, the central bank's debt purchase and an auction. 'U.S.-China trade agreement is also a positive for bonds as it is good for the rupee and will further support sentiment,' said Debendra Kumar Dash, senior vice president of treasury at AU Small Finance Bank. India's consumer inflation data for April is due on Tuesday. Economists polled by Reuters expect the key price gauge to have declined to a near six-year low of 3.27%. The Reserve Bank of India is scheduled to purchase 250 billion rupees ($2.95 billion) of bonds on Thursday and New Delhi will sell bonds worth 250 billion rupees on Friday. U.S. consumer price inflation and retail sales data, due this week, will be eyed for cues on future Federal Reserve policy rate actions.
