Informist, Thursday, Oct 6, 2022

By Aaryan Khanna

NEW DELHI – Government bond prices slumped for the second time in three trading sessions after traders were left disappointed by delay in the inclusion of Indian gilts in global bond indices, dealers said.

Today, the 7.26%, 2032 bond closed at 98.65 rupees, or 7.45% yield, as against 99.28 rupees, or 7.36% yield, on Tuesday. This was the largest single-day rise in the benchmark yield since Aug 5, when the yield jumped 14 basis points.

The most traded 6.54%, 2032 bond settled at 93.80 rupees, or 7.48% yield, against 94.37 rupees, or 7.39% yield, the previous day.

JPMorgan said on Tuesday that it had not included India's sovereign debt on its bond index. Investors cited operational hurdles that needed to be resolved before India's inclusion in the bond index for emerging market debt, according to the index review report published by the investment bank.

Indian bonds would remain on watch for inclusion based on investor feedback, retaining the status quo from October 2021, the report said.

On Sep 30, FTSE Russell also said Indian government bonds would remain on the watchlist for inclusion but did not include them in the current round.

Short sellers initiated fresh bets at levels considered attractive following a jump in prices on Tuesday. With the delay in bond index inclusion, foreign investors were also trimming their stock of Indian gilts, dealers said.

Adverse global cues also weighed on prices. The yield on the 10-year US Treasury note jumped by 14 basis points to 3.76% on Wednesday after economic data indicated the US Federal Reserve would not pivot from sharp monetary policy tightening. 

A rise in US Treasury yields narrows the interest rate differential between the safe-haven asset and emerging market debt, making the latter less appealing to foreign investors.

Moreover, crude oil futures surged after the Organization of the Petroleum Exporting Countries and its allies agreed to further tighten global oil supply with an agreement to slash crude production by about 2 mln barrels per day.

Brent crude for December delivery rose over 1.5% to settle at $93.37 a bbl on Wednesday after the key meeting, and was largely steady by the end of Indian market hours.

Investor appetite was uncertain at the 280-bln-rupee weekly gilt auction on Friday, after yields rose sharply on Monday, then bounced back strongly on Tuesday before the weakness today.

The government has offered to sell 70 bln rupees of the 7.38%, 2027 bond, 120 bln rupees of the 7.26%, 2032 bond, and 90 bln rupees of the 7.36%, 2052 bond this week.

"We will have to reconsider the demand for gilts at the auction, because the volatility is a bit unsettling," a dealer at a state-owned bank said. 

The day saw two spurts of short covering that capped the rise in yields, with traders taking cues from a fall in overnight indexed swap rates off highs, dealers said. 

The five-year OIS rate had tumbled on the back of heavy receiving from a large corporate house, dealers said. The five-year OIS closed at 6.93%, near the day's low, against 7.01% earlier.

Investors were also keen to add to their portfolios as the yield on the 10-year benchmark 7.26%, 2032 bond approached the key 7.50% mark early in the day, dealers said.

"The market will track the offshore cues a lot more due to lack of domestic cues lined up," a dealer at a primary dealership said. "After the initial fall, trade was extremely range-bound, but let's see how the auction will go before we begin to see a proper consolidation."

According to data on the Reserve Bank of India's Negotiated Dealing System – Order Matching platform, the market-wide turnover stood at 274.20 bln rupees, compared with 350.00 bln rupees on Tuesday.

OUTLOOK

On Friday, government bond prices may open lower as traders make room for the 280-bln-rupee weekly gilt auction. The government has offered to sell 70 bln rupees of the 7.38%, 2027 bond, 120 bln rupees of the 7.26%, 2032 bond, and 90 bln rupees of the 7.36%, 2052 bond this week.

Traders may avoid large bets after the recent volatility, amid lack of fresh domestic cues.

Any movement in US Treasury yields and crude oil prices may also lend cues at open.

The yield on the most traded 6.54%, 2032 bond is seen at 7.33-7.45%, and that on the 10-year benchmark 7.26%, 2032 bond at 7.30-7.42%.

India Gilts: Remain down; recover briefly as 5-year OIS off highs

NEW DELHI--1320 IST--Prices of government bonds remained sharply lower due to a delay in bond index inclusion, as well as adverse global cues, dealers said.

JPMorgan kept India's sovereign debt on a watchlist for inclusion, dashing hopes of foreign portfolio inflows and making domestic traders trim holdings, dealers said.

Traders also placed short bets as the 10-year US Treasury yield rose 14 basis points on Monday to 3.76%, while Brent crude futures for December delivery traded above the $93.50-a-bbl mark, dealers said.

Gilt prices recovered briefly, taking cues from the five-year overnight indexed swap rate, which was sharply off highs, dealers said. The five-year OIS fell to a low of 6.93% from as much as 7.01% earlier.

"Gilt weakness was being contained by some strong receiving in OIS," a dealer at a state-owned bank said. "We were hearing some corporate was interested in receiving the five-year contract at around 7%."

However, traders persistently paid fixed rates in the five-year swap. The benchmark US Treasury yield rose further to 3.78% as European trade began, pushing the OIS rate higher and weighing on bonds, dealers said.

During the day, the yield on the most traded 6.54%, 2032 bond is seen at 7.44-7.52%, while that on the 10-year 7.26%, 2032 bond is seen at 7.40-7.50%.  (Aaryan Khanna)

India Gilts: Plunge on short bets after bond index inclusion delay

NEW DELHI--1000 IST--Government bond prices plunged as investors reduced their gilt holdings after JPMorgan said on Tuesday that it had not included India's sovereign debt on its bond index, dealers said.

Both JPMorgan and FTSE Russell have kept Indian government bonds on their watchlist for entry, but the delay means that the announcement for inclusion would be delayed to at least March, dealers said.  

Short sellers initiated fresh bets at levels considered attractive following a jump in prices on Tuesday. With the delay in bond index inclusion, foreign investors are seen trimming their stock of Indian gilts, dealers said.

"There is the big jump in US yields and crude that the market is looking at, and the confirmation of the delay in bond index inclusion from both index providers," a dealer at a private bank said. "If the volatility continues like this, trade volumes and market appetite may take a hit."

Adverse global cues weighed on gilt prices. The yield on the 10-year US Treasury note jumped 14 basis points to 3.76% on Wednesday after data indicated the US Federal Reserve would not pivot from sharp monetary policy tightening.

Meanwhile, Brent crude jumped nearly 1.5% on Wednesday and traded at $93.50 a bbl today after the Organization of the Petroleum Exporting Countries and allies agreed to slash crude production by about 2 mln barrels per day.

Investors re-entered the market and stepped up purchases as the yield on the 10-year benchmark 7.26%, 2032 gilt approached the key 7.50% mark, dealers said.

During the day, the yield on the most-traded 6.54%, 2032 bond is seen at 7.44-7.52%, while that on the 10-year 7.26%, 2032 bond is seen at 7.40-7.50%.  (Aaryan Khanna)

India Gilts: Seen down as index inclusion delayed, US yields rise

NEW DELHI – Prices of government bonds are seen opening lower after JPMorgan said on Tuesday that it had not included India's sovereign debt on its bond index, dealers said. A sharp rise in US Treasury yields and crude prices may also weigh.

Today, the yield on the most-traded 6.54%, 2032 bond is seen at 7.40-7.48% as against 7.39% on Tuesday. The yield on the 10-year 7.26%, 2032 bond is seen at 7.35-7.45% as against 7.36% earlier.

Investors cited operational hurdles which need to be resolved before India's inclusion of the bond index for emerging market debt, according to the index review report published by the investment bank on Tuesday.

Indian bonds would remain on watch for inclusion based on investor feedback, retaining the status quo from October 2021, the report said.

On Sep 30, FTSE Russell also said Indian government bonds will remain on the watchlist for inclusion but did not include them in the current round.

The yield on the 10-year US Treasury note jumped 14 basis points to 3.76% on Wednesday after two straight days of declines as economic data failed to reinforce hope that the US Federal Reserve might pivot to a slower pace of monetary policy tightening.

A rise in US Treasury yields narrows the interest rate differential between the safe-haven asset and emerging market debt, making the latter less appealing to foreign investors. The benchmark US yield was steady in Asian trade today.

Moreover, crude oil futures surged after the Organization of the Petroleum Exporting Countries and allies agreed to further tighten global oil supply with an agreement to slash crude production by about 2 mln barrels per day.

Brent crude for December delivery rose over 1.5% to settle at $93.37 a bbl on Wednesday after the key meeting, and were steady in Asian trade today.

Traders await cues on market appetite for dated securities following two days of volatility after the Monetary Policy Committee raised the repo rate by 50 basis points last week and cemented expectations of a higher terminal rate going forward, dealers said.

Indian financial markets were shut on Wednesday on account of Dussehra.

Dealers may also make room for the 280-bln-rupee weekly gilt auction on Friday, in the first scheduled gilt issuance in the Oct-Mar borrowing calendar.

The government has offered to sell 70 bln rupees of the 7.38%, 2027 bond, 120 bln rupees of the 7.26%, 2032 bond, and 90 bln rupees of the 7.36%, 2052 bond this week.  (Aaryan Khanna)

End

US$1 = 81.88 rupees

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

Edited by Avishek Dutta

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

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2022. All rights reserved.

Informist, Thursday, Oct 6, 2022

By Aaryan Khanna

NEW DELHI – Government bond prices slumped for the second time in three trading sessions after traders were left disappointed by delay in the inclusion of Indian gilts in global bond indices, dealers said.

Today, the 7.26%, 2032 bond closed at 98.65 rupees, or 7.45% yield, as against 99.28 rupees, or 7.36% yield, on Tuesday. This was the largest single-day rise in the benchmark yield since Aug 5, when the yield jumped 14 basis points.

The most traded 6.54%, 2032 bond settled at 93.80 rupees, or 7.48% yield, against 94.37 rupees, or 7.39% yield, the previous day.

JPMorgan said on Tuesday that it had not included India's sovereign debt on its bond index. Investors cited operational hurdles that needed to be resolved before India's inclusion in the bond index for emerging market debt, according to the index review report published by the investment bank.

Indian bonds would remain on watch for inclusion based on investor feedback, retaining the status quo from October 2021, the report said.

On Sep 30, FTSE Russell also said Indian government bonds would remain on the watchlist for inclusion but did not include them in the current round.

Short sellers initiated fresh bets at levels considered attractive following a jump in prices on Tuesday. With the delay in bond index inclusion, foreign investors were also trimming their stock of Indian gilts, dealers said.

Adverse global cues also weighed on prices. The yield on the 10-year US Treasury note jumped by 14 basis points to 3.76% on Wednesday after economic data indicated the US Federal Reserve would not pivot from sharp monetary policy tightening. 

A rise in US Treasury yields narrows the interest rate differential between the safe-haven asset and emerging market debt, making the latter less appealing to foreign investors.

Moreover, crude oil futures surged after the Organization of the Petroleum Exporting Countries and its allies agreed to further tighten global oil supply with an agreement to slash crude production by about 2 mln barrels per day.

Brent crude for December delivery rose over 1.5% to settle at $93.37 a bbl on Wednesday after the key meeting, and was largely steady by the end of Indian market hours.

Investor appetite was uncertain at the 280-bln-rupee weekly gilt auction on Friday, after yields rose sharply on Monday, then bounced back strongly on Tuesday before the weakness today.

The government has offered to sell 70 bln rupees of the 7.38%, 2027 bond, 120 bln rupees of the 7.26%, 2032 bond, and 90 bln rupees of the 7.36%, 2052 bond this week.

"We will have to reconsider the demand for gilts at the auction, because the volatility is a bit unsettling," a dealer at a state-owned bank said. 

The day saw two spurts of short covering that capped the rise in yields, with traders taking cues from a fall in overnight indexed swap rates off highs, dealers said. 

The five-year OIS rate had tumbled on the back of heavy receiving from a large corporate house, dealers said. The five-year OIS closed at 6.93%, near the day's low, against 7.01% earlier.

Investors were also keen to add to their portfolios as the yield on the 10-year benchmark 7.26%, 2032 bond approached the key 7.50% mark early in the day, dealers said.

"The market will track the offshore cues a lot more due to lack of domestic cues lined up," a dealer at a primary dealership said. "After the initial fall, trade was extremely range-bound, but let's see how the auction will go before we begin to see a proper consolidation."

According to data on the Reserve Bank of India's Negotiated Dealing System – Order Matching platform, the market-wide turnover stood at 274.20 bln rupees, compared with 350.00 bln rupees on Tuesday.

OUTLOOK

On Friday, government bond prices may open lower as traders make room for the 280-bln-rupee weekly gilt auction. The government has offered to sell 70 bln rupees of the 7.38%, 2027 bond, 120 bln rupees of the 7.26%, 2032 bond, and 90 bln rupees of the 7.36%, 2052 bond this week.

Traders may avoid large bets after the recent volatility, amid lack of fresh domestic cues.

Any movement in US Treasury yields and crude oil prices may also lend cues at open.

The yield on the most traded 6.54%, 2032 bond is seen at 7.33-7.45%, and that on the 10-year benchmark 7.26%, 2032 bond at 7.30-7.42%.

India Gilts: Remain down; recover briefly as 5-year OIS off highs

NEW DELHI--1320 IST--Prices of government bonds remained sharply lower due to a delay in bond index inclusion, as well as adverse global cues, dealers said.

JPMorgan kept India's sovereign debt on a watchlist for inclusion, dashing hopes of foreign portfolio inflows and making domestic traders trim holdings, dealers said.

Traders also placed short bets as the 10-year US Treasury yield rose 14 basis points on Monday to 3.76%, while Brent crude futures for December delivery traded above the $93.50-a-bbl mark, dealers said.

Gilt prices recovered briefly, taking cues from the five-year overnight indexed swap rate, which was sharply off highs, dealers said. The five-year OIS fell to a low of 6.93% from as much as 7.01% earlier.

"Gilt weakness was being contained by some strong receiving in OIS," a dealer at a state-owned bank said. "We were hearing some corporate was interested in receiving the five-year contract at around 7%."

However, traders persistently paid fixed rates in the five-year swap. The benchmark US Treasury yield rose further to 3.78% as European trade began, pushing the OIS rate higher and weighing on bonds, dealers said.

During the day, the yield on the most traded 6.54%, 2032 bond is seen at 7.44-7.52%, while that on the 10-year 7.26%, 2032 bond is seen at 7.40-7.50%.  (Aaryan Khanna)

India Gilts: Plunge on short bets after bond index inclusion delay

NEW DELHI--1000 IST--Government bond prices plunged as investors reduced their gilt holdings after JPMorgan said on Tuesday that it had not included India's sovereign debt on its bond index, dealers said.

Both JPMorgan and FTSE Russell have kept Indian government bonds on their watchlist for entry, but the delay means that the announcement for inclusion would be delayed to at least March, dealers said.  

Short sellers initiated fresh bets at levels considered attractive following a jump in prices on Tuesday. With the delay in bond index inclusion, foreign investors are seen trimming their stock of Indian gilts, dealers said.

"There is the big jump in US yields and crude that the market is looking at, and the confirmation of the delay in bond index inclusion from both index providers," a dealer at a private bank said. "If the volatility continues like this, trade volumes and market appetite may take a hit."

Adverse global cues weighed on gilt prices. The yield on the 10-year US Treasury note jumped 14 basis points to 3.76% on Wednesday after data indicated the US Federal Reserve would not pivot from sharp monetary policy tightening.

Meanwhile, Brent crude jumped nearly 1.5% on Wednesday and traded at $93.50 a bbl today after the Organization of the Petroleum Exporting Countries and allies agreed to slash crude production by about 2 mln barrels per day.

Investors re-entered the market and stepped up purchases as the yield on the 10-year benchmark 7.26%, 2032 gilt approached the key 7.50% mark, dealers said.

During the day, the yield on the most-traded 6.54%, 2032 bond is seen at 7.44-7.52%, while that on the 10-year 7.26%, 2032 bond is seen at 7.40-7.50%.  (Aaryan Khanna)

India Gilts: Seen down as index inclusion delayed, US yields rise

NEW DELHI – Prices of government bonds are seen opening lower after JPMorgan said on Tuesday that it had not included India's sovereign debt on its bond index, dealers said. A sharp rise in US Treasury yields and crude prices may also weigh.

Today, the yield on the most-traded 6.54%, 2032 bond is seen at 7.40-7.48% as against 7.39% on Tuesday. The yield on the 10-year 7.26%, 2032 bond is seen at 7.35-7.45% as against 7.36% earlier.

Investors cited operational hurdles which need to be resolved before India's inclusion of the bond index for emerging market debt, according to the index review report published by the investment bank on Tuesday.

Indian bonds would remain on watch for inclusion based on investor feedback, retaining the status quo from October 2021, the report said.

On Sep 30, FTSE Russell also said Indian government bonds will remain on the watchlist for inclusion but did not include them in the current round.

The yield on the 10-year US Treasury note jumped 14 basis points to 3.76% on Wednesday after two straight days of declines as economic data failed to reinforce hope that the US Federal Reserve might pivot to a slower pace of monetary policy tightening.

A rise in US Treasury yields narrows the interest rate differential between the safe-haven asset and emerging market debt, making the latter less appealing to foreign investors. The benchmark US yield was steady in Asian trade today.

Moreover, crude oil futures surged after the Organization of the Petroleum Exporting Countries and allies agreed to further tighten global oil supply with an agreement to slash crude production by about 2 mln barrels per day.

Brent crude for December delivery rose over 1.5% to settle at $93.37 a bbl on Wednesday after the key meeting, and were steady in Asian trade today.

Traders await cues on market appetite for dated securities following two days of volatility after the Monetary Policy Committee raised the repo rate by 50 basis points last week and cemented expectations of a higher terminal rate going forward, dealers said.

Indian financial markets were shut on Wednesday on account of Dussehra.

Dealers may also make room for the 280-bln-rupee weekly gilt auction on Friday, in the first scheduled gilt issuance in the Oct-Mar borrowing calendar.

The government has offered to sell 70 bln rupees of the 7.38%, 2027 bond, 120 bln rupees of the 7.26%, 2032 bond, and 90 bln rupees of the 7.36%, 2052 bond this week.  (Aaryan Khanna)

End

US$1 = 81.88 rupees

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

Edited by Avishek Dutta

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

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2022. All rights reserved.