Informist, Thursday, Jan 12, 2023

By Kasthuri Akhil and Nishat Anjum

MUMBAI – Prices of government bonds ended steady today as traders refrained from placing aggressive bets due to caution ahead of the domestic and US consumer inflation prints, due after market hours today, dealers said.

The 10-year benchmark 7.26%, 2032 bond ended at 99.81 rupees, or 7.29% yield, against 99.78 rupees, or 7.29% yield on Wednesday.

Bonds largely traded in a thin range through the day as the impact of a fall in US Treasury yields was negated by a rise in crude oil prices, dealers said. Crude oil prices rose to a one-week high and gained 3% on Wednesday as the growth outlook for the global economy improved, even as US oil inventories rose more than expected. The Brent crude oil futures contract for March delivery was at $82.67 per barrel on Wednesday compared with $80.10 per bbl on Tuesday.

The yield on the benchmark 10-year US Treasury note fell by 7 basis points to 3.54% on Wednesday compared to Tuesday's close. US Treasury yields fell on the view that a favourable inflation print for December might prompt the US Federal Reserve to soften its policy rate hike path. A fall in US Treasury yields widens the interest rate differential between the safe-haven asset and emerging market debt, making the latter more appealing to foreign investors.

According to CME FedWatch tool, nearly 76% of futures traders expect the US rate-setting panel to hike the federal funds rate by 25 bps in their February policy review. 

"Traders are mostly looking at the US CPI number, as the market already expects our (India) CPI to be largely in line with market expectations," a dealer at a private bank said. "Even if our CPI is more than 6%, it doesn't change the terminal rate view."

Domestically, along with the headline inflation number, traders keenly await the core inflation number, which is seen as a major area of concern as it remained above 6% in the November CPI print, dealers said. While the headline inflation print is seen at 5.9% in December, well within the RBI's mandated tolerance band of 2-6%, core inflation is expected to remain sticky, according to a poll by Informist.

Domestic CPI inflation data is scheduled to be released at 1730 IST. 

Some traders trimmed their gilt holdings to book profits at prices considered lucrative, but prices continued to stay in a narrow range because of the overarching positive sentiment in the market regarding the CPI print, dealers said. 

"Traders were booking profits, but they were selling bit by bit to build pressure for tomorrow's opening as by then, the view on the inflation data would be clear," a dealer at a state-owned bank said.

Some traders also made space for the bonds lined up at the 300-bln-rupee auction on Friday, dealers said. Among the four bonds scheduled for auction, the 14-year 2036 paper saw the most short selling as traders looked to cover their bets at lucrative prices on the paper at the auction, dealers said. 

The government has offered to sell 40 bln rupees of a new 2025 bond; 60 bln rupees of the 7.10%, 2029 bond; 110 bln rupees of the 7.41%, 2036 bond; and 90 bln rupees of the 7.40%, 2062 bond.

The new 2025 bond was bid at 6.95% in the when-issued segment, which indicates firm demand for the paper, dealers said. The new coupon would remain significantly above the on-the-run two-year 6.69%, 2024 bond, as its maturity is due in less than two years.

According to data on the RBI's Negotiated Dealing System – Order Matching platform, the turnover today was 325.15 bln rupees, compared with 453.00 bln rupees on Wednesday.

Meanwhile, there were no trades settled with the digital rupee pilot today, compared with 300 mln rupees in six deals on Wednesday.

OUTLOOK

On Friday, bond prices are seen opening steady as traders may remain on the sidelines ahead of the 300-bln-rupee gilt auction, dealers said.

Traders are seen taking cues from the US and India CPI data, which will be released after market hours today, dealers said.

They may also take cues from overnight movement in US Treasury yields and crude oil prices. 

The yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.25-7.33%.

India Gilts:Up on view Fed to slow rate hike pace; India, US CPI eyed

MUMBAI--1419 IST--Government bond prices rose today as traders expect US inflation data for December to show price pressures rapidly receding, making the case for a slower pace of rate hikes by the Federal Reserve, dealers said.

However, traders avoided placing aggressive bets ahead of the domestic and US inflation data release after market hours today.

"The US inflation data is what traders are looking forward to more than domestic inflation data," a dealer at a primary dealership said. "The data has to be better than what market expects; even if it comes out to be on the expected lines, gilts will fall." 

US inflation data is expected to determine the pace of monetary policy tightening in the US and India, as domestic policymakers may be wary of pausing rate hikes if the US continues, dealers said. The headline US CPI inflation print may moderate to 6.5% in December from 7.1% in November, according to Reuters.

Meanwhile, consumer inflation in India may remain within the Reserve Bank of India's target band of 2-6% for the second straight month. Analysts expect CPI inflation to be flat at 5.9% in December, according to an Informist poll.

While market sentiment remained upbeat, some traders trimmed their gilt holdings on caution before the data release, while also making room for the fresh supply from the 300-bln-rupee weekly gilt auction on Friday, dealers said.

The government has offered to sell 40 bln rupees of a new 2025 bond; 60 bln rupees of the 7.10%, 2029 bond; 110 bln rupees of the 7.41%, 2036 bond; and 90 bln rupees of the 7.40%, 2062 bond.

The market's appetite was firm, but traders were uncertain about the cutoffs at the auction. The CPI data and the underwriting auction would lend some clarity on market demand, particularly for the new bond, dealers said. 

In the when-issued segment, the new paper was bid at 6.95%, which would indicate firm demand, dealers said. The new coupon would remain significantly over the on-the-run 6.69%, 2024 paper as its maturity was around six months between the new 2025 bond.

According to data on the RBI's Negotiated Dealing System, Order Matching platform, the market-wide turnover was 248.90 bln rupees at 1420 IST, compared with 321.85 bln rupees at 1430 IST on Wednesday.

Today, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.26-7.33%.  (Anjali)

India Gilts: Steady on caution ahead of India, US Dec CPI prints

MUMBAI--1020 IST--Government bond prices were steady due to caution ahead of the domestic as well as US consumer inflation prints for December, scheduled to be released after market hours today, dealers said.

Some traders trimmed their holdings for profit after the 7.26%, 2032 bond rose by 15 paise on Wednesday, dealers said. Traders had stocked up on gilts on Wednesday due to optimism over receding inflationary pressures.

Dealers expect domestic CPI inflation for December to remain largely benign, with positive market sentiment from Wednesday's close intact in the domestic market through the day, dealers said. India's CPI inflation for December is seen at 5.9%, little changed from the 5.88% reading for November, according to a poll by Informist.

Moreover, overseas investors expect US headline inflation to have softened in December to 6.5% from 7.1% in November, according to a Reuters poll. Hence, traders expect smaller rate hikes by the US Federal Reserve. This is likely to push the Reserve Bank of India's rate-setting panel to temper its pace of rate hikes too.

"The market will mostly remain in a narrow range today from 7.27-7.31%," a dealer at a state-owned bank said. "The fall in US yields has been negated by the rise in crude oil prices since yesterday (Wednesday)."

The yield on the benchmark 10-year US Treasury fell to 3.52% after settling 7 basis points lower at 3.54% on Wednesday compared to Tuesday's close. However, the Brent crude contract for March delivery rose by about $2 to $82.67 on Wednesday from Tuesday's settlement.

According to data on the RBI's Negotiated Dealing System, Order Matching platform, the market-wide turnover was 70.35 bln rupees at 1015 IST, compared with 93.75 bln rupees at 1030 IST on Wednesday.

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.26-7.33%. (Kasthuri Akhil)

India Gilts: Seen steady ahead of India, US Dec CPI data release

MUMBAI – Prices of government bonds are expected to open steady as traders may avoid aggressive bets ahead of the US and India CPI data, scheduled after market hours, dealers said. Moreover, the impact of a fall in US Treasury yields may be offset by the rise in crude oil prices on Wednesday.

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.27-7.34%, as against 7.29% on Wednesday.

According to an Informist poll, India's CPI inflation is seen at 5.9% in December, little changed from the 5.88% reading for November. The domestic CPI data is scheduled to be released at 1730 IST.

Traders look forward to domestic core inflation numbers, as these may determine the pace of policy tightening by the Reserve Bank of India's Monetary Policy Committee, dealers said. In the December meeting of the rate-setting panel, committee members, including RBI Governor Shaktikanta Das, highlighted the still high core inflation print. In November, core inflation was at 6.1%.

Globally, investors expect US headline inflation to soften in December to 6.5% from 7.1% in November, according to a Reuters poll. Hence, traders expect smaller rate hikes by the US Federal Reserve. They expect the Fed to raise rates by 25 basis points at its upcoming policy meeting in February.

The yield on the benchmark 10-year US Treasury fell 7 bps to 3.54% on Wednesday compared with Tuesday's close. A fall in the US Treasury yields widens the interest rate differential between the safe-haven asset and emerging market debt, making the latter more appealing to foreign investors.

Meanwhile, crude oil prices rose to a one-week high and gained 3% on Wednesday as the growth outlook for the world economy improved, even as US oil inventories rose higher than expected. Brent crude oil future for March delivery was at $82.67 per barrel on Wednesday compared with $80.10 per bbl on Tuesday. (Nishat Anjum)

End

US$1 = 81.55 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 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2023. All rights reserved.

Informist, Thursday, Jan 12, 2023

By Kasthuri Akhil and Nishat Anjum

MUMBAI – Prices of government bonds ended steady today as traders refrained from placing aggressive bets due to caution ahead of the domestic and US consumer inflation prints, due after market hours today, dealers said.

The 10-year benchmark 7.26%, 2032 bond ended at 99.81 rupees, or 7.29% yield, against 99.78 rupees, or 7.29% yield on Wednesday.

Bonds largely traded in a thin range through the day as the impact of a fall in US Treasury yields was negated by a rise in crude oil prices, dealers said. Crude oil prices rose to a one-week high and gained 3% on Wednesday as the growth outlook for the global economy improved, even as US oil inventories rose more than expected. The Brent crude oil futures contract for March delivery was at $82.67 per barrel on Wednesday compared with $80.10 per bbl on Tuesday.

The yield on the benchmark 10-year US Treasury note fell by 7 basis points to 3.54% on Wednesday compared to Tuesday's close. US Treasury yields fell on the view that a favourable inflation print for December might prompt the US Federal Reserve to soften its policy rate hike path. A fall in US Treasury yields widens the interest rate differential between the safe-haven asset and emerging market debt, making the latter more appealing to foreign investors.

According to CME FedWatch tool, nearly 76% of futures traders expect the US rate-setting panel to hike the federal funds rate by 25 bps in their February policy review. 

"Traders are mostly looking at the US CPI number, as the market already expects our (India) CPI to be largely in line with market expectations," a dealer at a private bank said. "Even if our CPI is more than 6%, it doesn't change the terminal rate view."

Domestically, along with the headline inflation number, traders keenly await the core inflation number, which is seen as a major area of concern as it remained above 6% in the November CPI print, dealers said. While the headline inflation print is seen at 5.9% in December, well within the RBI's mandated tolerance band of 2-6%, core inflation is expected to remain sticky, according to a poll by Informist.

Domestic CPI inflation data is scheduled to be released at 1730 IST. 

Some traders trimmed their gilt holdings to book profits at prices considered lucrative, but prices continued to stay in a narrow range because of the overarching positive sentiment in the market regarding the CPI print, dealers said. 

"Traders were booking profits, but they were selling bit by bit to build pressure for tomorrow's opening as by then, the view on the inflation data would be clear," a dealer at a state-owned bank said.

Some traders also made space for the bonds lined up at the 300-bln-rupee auction on Friday, dealers said. Among the four bonds scheduled for auction, the 14-year 2036 paper saw the most short selling as traders looked to cover their bets at lucrative prices on the paper at the auction, dealers said. 

The government has offered to sell 40 bln rupees of a new 2025 bond; 60 bln rupees of the 7.10%, 2029 bond; 110 bln rupees of the 7.41%, 2036 bond; and 90 bln rupees of the 7.40%, 2062 bond.

The new 2025 bond was bid at 6.95% in the when-issued segment, which indicates firm demand for the paper, dealers said. The new coupon would remain significantly above the on-the-run two-year 6.69%, 2024 bond, as its maturity is due in less than two years.

According to data on the RBI's Negotiated Dealing System – Order Matching platform, the turnover today was 325.15 bln rupees, compared with 453.00 bln rupees on Wednesday.

Meanwhile, there were no trades settled with the digital rupee pilot today, compared with 300 mln rupees in six deals on Wednesday.

OUTLOOK

On Friday, bond prices are seen opening steady as traders may remain on the sidelines ahead of the 300-bln-rupee gilt auction, dealers said.

Traders are seen taking cues from the US and India CPI data, which will be released after market hours today, dealers said.

They may also take cues from overnight movement in US Treasury yields and crude oil prices. 

The yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.25-7.33%.

India Gilts:Up on view Fed to slow rate hike pace; India, US CPI eyed

MUMBAI--1419 IST--Government bond prices rose today as traders expect US inflation data for December to show price pressures rapidly receding, making the case for a slower pace of rate hikes by the Federal Reserve, dealers said.

However, traders avoided placing aggressive bets ahead of the domestic and US inflation data release after market hours today.

"The US inflation data is what traders are looking forward to more than domestic inflation data," a dealer at a primary dealership said. "The data has to be better than what market expects; even if it comes out to be on the expected lines, gilts will fall." 

US inflation data is expected to determine the pace of monetary policy tightening in the US and India, as domestic policymakers may be wary of pausing rate hikes if the US continues, dealers said. The headline US CPI inflation print may moderate to 6.5% in December from 7.1% in November, according to Reuters.

Meanwhile, consumer inflation in India may remain within the Reserve Bank of India's target band of 2-6% for the second straight month. Analysts expect CPI inflation to be flat at 5.9% in December, according to an Informist poll.

While market sentiment remained upbeat, some traders trimmed their gilt holdings on caution before the data release, while also making room for the fresh supply from the 300-bln-rupee weekly gilt auction on Friday, dealers said.

The government has offered to sell 40 bln rupees of a new 2025 bond; 60 bln rupees of the 7.10%, 2029 bond; 110 bln rupees of the 7.41%, 2036 bond; and 90 bln rupees of the 7.40%, 2062 bond.

The market's appetite was firm, but traders were uncertain about the cutoffs at the auction. The CPI data and the underwriting auction would lend some clarity on market demand, particularly for the new bond, dealers said. 

In the when-issued segment, the new paper was bid at 6.95%, which would indicate firm demand, dealers said. The new coupon would remain significantly over the on-the-run 6.69%, 2024 paper as its maturity was around six months between the new 2025 bond.

According to data on the RBI's Negotiated Dealing System, Order Matching platform, the market-wide turnover was 248.90 bln rupees at 1420 IST, compared with 321.85 bln rupees at 1430 IST on Wednesday.

Today, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.26-7.33%.  (Anjali)

India Gilts: Steady on caution ahead of India, US Dec CPI prints

MUMBAI--1020 IST--Government bond prices were steady due to caution ahead of the domestic as well as US consumer inflation prints for December, scheduled to be released after market hours today, dealers said.

Some traders trimmed their holdings for profit after the 7.26%, 2032 bond rose by 15 paise on Wednesday, dealers said. Traders had stocked up on gilts on Wednesday due to optimism over receding inflationary pressures.

Dealers expect domestic CPI inflation for December to remain largely benign, with positive market sentiment from Wednesday's close intact in the domestic market through the day, dealers said. India's CPI inflation for December is seen at 5.9%, little changed from the 5.88% reading for November, according to a poll by Informist.

Moreover, overseas investors expect US headline inflation to have softened in December to 6.5% from 7.1% in November, according to a Reuters poll. Hence, traders expect smaller rate hikes by the US Federal Reserve. This is likely to push the Reserve Bank of India's rate-setting panel to temper its pace of rate hikes too.

"The market will mostly remain in a narrow range today from 7.27-7.31%," a dealer at a state-owned bank said. "The fall in US yields has been negated by the rise in crude oil prices since yesterday (Wednesday)."

The yield on the benchmark 10-year US Treasury fell to 3.52% after settling 7 basis points lower at 3.54% on Wednesday compared to Tuesday's close. However, the Brent crude contract for March delivery rose by about $2 to $82.67 on Wednesday from Tuesday's settlement.

According to data on the RBI's Negotiated Dealing System, Order Matching platform, the market-wide turnover was 70.35 bln rupees at 1015 IST, compared with 93.75 bln rupees at 1030 IST on Wednesday.

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.26-7.33%. (Kasthuri Akhil)

India Gilts: Seen steady ahead of India, US Dec CPI data release

MUMBAI – Prices of government bonds are expected to open steady as traders may avoid aggressive bets ahead of the US and India CPI data, scheduled after market hours, dealers said. Moreover, the impact of a fall in US Treasury yields may be offset by the rise in crude oil prices on Wednesday.

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.27-7.34%, as against 7.29% on Wednesday.

According to an Informist poll, India's CPI inflation is seen at 5.9% in December, little changed from the 5.88% reading for November. The domestic CPI data is scheduled to be released at 1730 IST.

Traders look forward to domestic core inflation numbers, as these may determine the pace of policy tightening by the Reserve Bank of India's Monetary Policy Committee, dealers said. In the December meeting of the rate-setting panel, committee members, including RBI Governor Shaktikanta Das, highlighted the still high core inflation print. In November, core inflation was at 6.1%.

Globally, investors expect US headline inflation to soften in December to 6.5% from 7.1% in November, according to a Reuters poll. Hence, traders expect smaller rate hikes by the US Federal Reserve. They expect the Fed to raise rates by 25 basis points at its upcoming policy meeting in February.

The yield on the benchmark 10-year US Treasury fell 7 bps to 3.54% on Wednesday compared with Tuesday's close. A fall in the US Treasury yields widens the interest rate differential between the safe-haven asset and emerging market debt, making the latter more appealing to foreign investors.

Meanwhile, crude oil prices rose to a one-week high and gained 3% on Wednesday as the growth outlook for the world economy improved, even as US oil inventories rose higher than expected. Brent crude oil future for March delivery was at $82.67 per barrel on Wednesday compared with $80.10 per bbl on Tuesday. (Nishat Anjum)

End

US$1 = 81.55 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 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2023. All rights reserved.