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Informist, Wednesday, Aug. 12, 2026

 

MUMBAI – Government bond prices and swap rates on Thursday are likely to track overnight movement in US Treasury yields after the release of US inflation data, dealers said. Data released after Indian market hours showed that headline annual inflation in the world's largest economy eased to 3.4% in July from 3.5% the previous month. US yields were little changed after CPI inflation. Bets of a rate hike by the Fed in September reduced, with Fed fund futures pricing in a 38% chance of a 25 bps rate hike next month from 48?ay ago, according to the CME FedWatch tool. Bonds and swaps will also track developments in West Asia and their impact on crude oil prices.

 

Thursday, the one-day interbank call money rate is seen below the RBI's repo rate of 5.25% as liquidity surplus remained ample amid inflows through foreign currency non-resident (banks) deposits, dealers said.

 

GOVERNMENT BONDS

On Thursday, gilt prices may take direction from developments in the war in West Asia and their impact on crude oil prices and US Treasury yields, dealers said. It will track movement in US Treasury yields after the release of US inflation data. Data released after Indian market hours showed that headline annual inflation in the world's largest economy eased to 3.4% in July from 3.5% the previous month. US yields were little changed after CPI inflation. The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 6.72% and 6.82% Thursday, dealers said. Any significant movement in the rupee and swap rates will also lend cues, dealers said. The 10-year benchmark 6.94%, 2036 bond ended at INR 101.13. Its yield settled at 6.7776%.

 

OIS RATES

On Thursday, swap rates will track the overnight movement in crude oil prices and US Treasury yields, dealers said. Some banks are still seen receiving fixed rates due to inflows through foreign currency non-resident (banks) deposits, dealers said. However, swap rates are seen sticky with little direction barring global triggers. Offshore traders have been largely absent from swaps this week, with a slight receiving bias. The movement of the rupee and overnight borrowing rates will also lend cues. The one-year swap rate is seen in the range of 5.65-6.10% and the five-year at 6.12-6.40%. The one-year swap rate closed at 5.77% and the five-year swap rate settled at 6.27%.

 

CALL

Thursday, the one-day interbank call money rate is seen below the RBI's repo rate of 5.25% as liquidity surplus remained ample amid inflows through foreign currency non-resident (banks) deposits, at least until outflows for goods and services tax begin in the latter half of the month, dealers said. However, cash in hand may be tight nearing the end of the reporting fortnight, the upcoming holiday weekend and with funds locked up in initial public offerings, dealers said. Further, traders prefer overnight variable rate reverse repo auctions compared to other tenures. The overnight VRRR Thursday may once again see robust subscription, dealers said. The RBI will conduct an overnight VRRR for INR 1 trillion Thursday. 

 

Core systemic liquidity surplus could hit INR 9 trillion if inflows from FCNR(B) deposits continue to grow at a robust pace. Traders estimate inflows from these deposits to have hit about $45 billion as of this week. Dealers expect the one-day call rate at 4.60–5.45% Thursday. The one-day tri-party repo rate is expected to be in the 4.60–5.30?nd. The weighted average call rate is expected to be in the 5.05–5.20?nd and the tri-party repo rate is likely to be 4.90-5.15%, dealers said. The one-day call money rate ended at 5.12% Wednesday. The weighted average call rate was 5.11%,

 

RBI AUCTION

--RBI to hold overnight variable rate reverse repo auction for INR 1.00 trillion 0930-1000 IST

 

LIQUIDITY

Total net outflows of INR 25.78 billion. The calculation of flows does not take into account redemption of the Standing Deposit Facility and scheduled variable rate repo and variable rate reverse repo operations.

 

* Inflows

--INR 147.00 billion for redemption of 91-day Treasury bills

--INR 126.00 billion for redemption of 182-day T-bills

--INR 60.48 billion for redemption of 364-day T-bills 

--INR 7.74 billion as coupon on state bonds

--INR 538.45 billion as redemption of overnight variable rate reverse repo tender 

 

* Outflows

--INR 171.00 billion as payment for 91-day T-bills

--INR 118.00 billion as payment for 182-day T-bills

--INR 78.00 billion as payment for 364-day T-bills

 

End

 

US$1 = INR 95.33

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

 

Reported by Cassandra Carvalho

Edited by Saji George Titus

 

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