Informist, Friday, Mar 24, 2023

By Nishat Anjum

MUMBAI – Prices of government bonds ended sharply higher today as US Treasury yields slumped during the day, dealers said. US Treasury yields fell as investors weighed the latest developments in the banking sector. Reignited fears of a crisis in the banking sector prompted investors to step-up purchases of the safe-haven asset.

The 10-year benchmark 7.26%, 2032 bond ended at 99.64 rupees, or 7.31% yield, against the previous close of 99.40 rupees, or 7.35% yield. The 7.26%, 2033 bond ended at 99.67 rupees, or 7.31% yield, against the previous close of 99.52 rupees, or 7.33%.

"We have been tracking US Treasury yields the whole day. Our market is closely watching things unfold overseas," a dealer at a primary dealership said. "The impact of it, if any, is yet to be seen."

Yield on the benchmark 10-year US Treasury note fell to 3.31% from 3.50% on Thursday at the end of Indian market hours. 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.

Shares of the Deutsche Bank fell by over 13% following a spike in credit default swaps on Thursday, as concerns about the stability of European banks persisted. A credit default swap is a financial derivative instrument by means of which an investor can offset their credit risk with that of another. The emergency rescue of Credit Suisse by UBS, in the wake of the collapse of US based Silicon Valley Bank, had triggered contagion concerns amongst investors. 

However, for the larger part of the day, gains in domestic bonds were limited as traders looked ahead to a large supply of gilts in the upcoming borrowing calendar for Apr-Sep, dealers said. Informist had exclusively reported on Mar 14 that the government may opt to conduct 55-58% of gross bond issuances for 2023-24 in Apr-Sep, according to a senior finance ministry official. In absolute terms, this amounts to 8.49-8.95 trln rupees. The government's gross borrowing target for 2023-24 (Apr-Mar) is 15.43 trln rupees.

"Nobody wants to go long right now. Everybody was playing intraday bets tracking US Treasury yields," a dealer at a state-owned bank said. "However, I think demand concern is very subjective. This year (financial year ending March) also there were similar concerns, but the supply got absorbed nevertheless. So, I think it's too early to worry."

Dealers said till the new financial year begins in April, the prices of government bonds may move in a narrow range. Traders see the next psychologically-crucial yield level at 7.31% for the 7.26%, 2032 bond, which implies the yield may not fall below this level, dealers said.

Amidst the banking sector crisis overseas, the market looked forward to the meeting of the Monetary Policy Committee for further clarity on the rate-hike trajectory back home. Traders still expected the domestic rate-setting panel to go for a 25-basis-point rate hike in April. They also largely expect the repo rate to top out at 6.75% after a final hike of 25 bps in April, dealers said. However, some dealers said that with each passing day, the number of people betting on a pause is slowly increasing.

According to data on RBI's Negotiated Dealing System-Order Matching platform, the turnover today was 388.20 bln rupees, compared with 349.45 bln rupees on Thursday. No trades were settled with the digital rupee pilot today. On Thursday, 50 mln rupees of trade were settled in one deal.

OUTLOOK

Gilts are not traded on Saturdays.

On Monday, bond prices are seen opening steady due to lack of significant domestic cues, dealers said.

Traders 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 7.25-7.35%.

India Gilts: Rise further tracking intraday fall in US yields

MUMBAI--1505 IST--Government bond prices continued to rise as US Treasury yields fell further during the day, dealers said. Yield on the benchmark 10-year US Treasury note fell to 3.33% from 3.38% in early trade and 3.50% on Thursday at the end of Indian market hours.

The gains in gilt prices, however, were capped as traders looked ahead to a large supply of gilts in the upcoming borrowing calendar for Apr-Sep, dealers said.

Some dealers speculated that state-owned banks sold their gilt holdings. "There is no genuine buying in the market right now. Gilts are seeing selling pressure," a dealer at a private bank said. "The caution of the huge upcoming supply is very much there in the market. Everybody is waiting to see how much will they frontload this time." 

Informist had exclusively reported on Mar 14 that the government may opt to conduct 55-58% of gross bond issuances for 2023-24 in Apr-Sep, according to a senior finance ministry official. In absolute terms, this amounts to 8.49-8.95 trln rupees. The government's gross borrowing target for 2023-24 (Apr-Mar) is 15.43 trln rupees.

Traders avoided aggressive bets as the market lacked any significant cues on the domestic front, dealers said. For the larger part of March, gilts tracked global cues, mainly US Treasury yields.

Dealers said till the new financial year begins in April, the government bond prices may move in a narrow range. Traders see the next psychologically crucial yield level at 7.31% for the 7.26%, 2032 bond, which implies that the yield may not fall below this level, dealers said.

The market also looked forward to the Monetary Policy Committee meeting to gain further clarity on the rate-hike trajectory back home. Traders still expected the domestic rate-setting panel to go for a 25-basis-point rate hike in April. They also largely expect the repo rate to top out at 6.75% after a final hike of 25 bps in April, dealers said. 

According to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform, the market-wide turnover was 251.45 bln rupees at 1500 IST, compared with 293.45 bln rupees at 1535 IST on Thursday.

For the rest of the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.38%. (Nishat Anjum)

India Gilts:Off highs as US ylds tad up; mkt lacks firm domestic cues

MUMBAI--1235 IST--Government bond prices were off the day's highs as US Treasury yields inched up during the day, dealers said. Prices remained in a narrow range as traders avoided aggressive bets due to lack of significant domestic cues. 

"We are tracking US Treasury yields tick by tick. Now, it has moved up to 3.40% (yield on the benchmark 10-year US Treasury note), our bond prices have all moved a bit down," a dealer at a private bank said. The yield on the benchmark 10-year US Treasury note rose to 3.41% during the day from 3.38% in early trade.

So far, the 10-year benchmark 7.26%, 2032 bond moved between the day's high of 99.55 rupees and low of 99.45 rupees. Similarly, most on-the-run gilts also had a difference of 11–12 paise between the day's high and low.

A large supply of gilts in the new financial year starting April weighed on gilts, keeping the gains limited, dealers said. Informist had reported on Mar 14 that the government might continue with the practice of front-loading its borrowing in the first half of the year, where it may opt to conduct 55-58% of gross bond issuances for 2023-24 in Apr-Sep, a senior finance ministry official told Informist. In absolute terms, this works out to 8.49-8.95 trln rupees. The government's gross borrowing target for 2023-24 (Apr-Mar) is 15.43 trln rupees.

"Soon, the gilt supply will start for the new financial year (starting April). There is a supply concern in the market and where the demand will come from for the gilts," the dealer said.

Government bond prices remained up tracking an overnight fall in US Treasury yields, dealers said. The yield on the benchmark 10-year US Treasury note fell to 3.38% on Thursday from 3.50% at the end of Indian market hours.

According to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform the market-wide turnover was 137.00 bln rupees at 1230 IST, compared with 174.05 bln rupees at 1230 IST on Thursday.

For the rest of the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.38%. (Nishat Anjum)

India Gilts: Rise as US yields fall; traders avoid aggressive bets

MUMBAI--0945 IST--Prices of government bonds rose today, tracking a fall in US Treasury yields. Traders avoided placing aggressive bets due to lack of firm domestic cues, dealers said.

The yield on the benchmark 10-year US Treasury note fell to 3.38% on Thursday from 3.50% at the end of Indian market hours. 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.

US yields plunged due to expectations that the federal funds rate may peak out soon, after the US Federal Open Market Committee hiked interest rates by 25 basis points on Wednesday.

Traders in the domestic market remained firm on expectations of a 25-bps rate hike by the Monetary Policy Committee in April, dealers said. "Similar to what happened yesterday (Thursday), we may see profit booking at 7.31-7.32% levels (yield on the benchmark 2032 bond)," a dealer at a private bank said. "There is overall positivity in the market because our rate hike expectation (by Reserve Bank of India) is still 25 bps."

Traders expect the domestic bond to trade within a narrow range till the outcome of the Monetary Policy Committee's policy review in April.

According to data on the Reserve Bank of India's Negotiated Dealing System--Order Matching platform--the market-wide turnover was 37.75 bln rupees at 0945 IST, compared with 79.35 bln rupees at 1005 IST on Thursday.

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.38%. (Kasthuri Akhil)

India Gilts: Seen rising tracking overnight fall in US yields

MUMBAI – Prices of government bonds are seen opening higher tracking an overnight fall in US Treasury yields, dealers said. US Treasury yields plunged as investors expect the US Federal Reserve to go slow on its policy tightening cycle going ahead.  

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.38% as against 7.35% on Thursday.

The yield on the benchmark 10-year US Treasury note fell 12 basis points to 3.38% on Thursday from Indian market close. 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.

Domestic traders hoped to gain more insight into the rate hike view in the US today as US yield movement usually stabilises a day later, after the Fed's policy review, dealers said. On Wednesday, the US Federal Open Market Committee raised the federal funds target range by 25 bps for the second straight meeting to 4.75-5.00%

Back home, traders still expected the Reserve Bank of India's Monetary Policy Committee to go for a 25 bps rate hike in April. The market also largely expects the repo rate to top out at 6.75% after a final hike of 25 bps in April, dealers said. Traders expected the domestic bond to trade in a narrow range till the Monetary Policy Committee's April policy review outcome.

Despite a sharp fall in US Treasury yields, traders expect a limited rise in domestic bond prices as they anticipate a large gilt supply in the new financial year starting Apr 1. This, as a result, may prevent the yield on the benchmark 2032 bond to fall below the psychologically crucial 7.30% mark, dealers said.

The government is expected to raise 8.49 trln rupees in the first half of the next financial year, slightly higher than 8.45 trln rupees it said it would borrow, according to several bond market participants who attended a meeting with the Reserve Bank of India, early March. (Kasthuri Akhil)

End

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

Edited by Vidhi Verma

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, Friday, Mar 24, 2023

By Nishat Anjum

MUMBAI – Prices of government bonds ended sharply higher today as US Treasury yields slumped during the day, dealers said. US Treasury yields fell as investors weighed the latest developments in the banking sector. Reignited fears of a crisis in the banking sector prompted investors to step-up purchases of the safe-haven asset.

The 10-year benchmark 7.26%, 2032 bond ended at 99.64 rupees, or 7.31% yield, against the previous close of 99.40 rupees, or 7.35% yield. The 7.26%, 2033 bond ended at 99.67 rupees, or 7.31% yield, against the previous close of 99.52 rupees, or 7.33%.

"We have been tracking US Treasury yields the whole day. Our market is closely watching things unfold overseas," a dealer at a primary dealership said. "The impact of it, if any, is yet to be seen."

Yield on the benchmark 10-year US Treasury note fell to 3.31% from 3.50% on Thursday at the end of Indian market hours. 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.

Shares of the Deutsche Bank fell by over 13% following a spike in credit default swaps on Thursday, as concerns about the stability of European banks persisted. A credit default swap is a financial derivative instrument by means of which an investor can offset their credit risk with that of another. The emergency rescue of Credit Suisse by UBS, in the wake of the collapse of US based Silicon Valley Bank, had triggered contagion concerns amongst investors. 

However, for the larger part of the day, gains in domestic bonds were limited as traders looked ahead to a large supply of gilts in the upcoming borrowing calendar for Apr-Sep, dealers said. Informist had exclusively reported on Mar 14 that the government may opt to conduct 55-58% of gross bond issuances for 2023-24 in Apr-Sep, according to a senior finance ministry official. In absolute terms, this amounts to 8.49-8.95 trln rupees. The government's gross borrowing target for 2023-24 (Apr-Mar) is 15.43 trln rupees.

"Nobody wants to go long right now. Everybody was playing intraday bets tracking US Treasury yields," a dealer at a state-owned bank said. "However, I think demand concern is very subjective. This year (financial year ending March) also there were similar concerns, but the supply got absorbed nevertheless. So, I think it's too early to worry."

Dealers said till the new financial year begins in April, the prices of government bonds may move in a narrow range. Traders see the next psychologically-crucial yield level at 7.31% for the 7.26%, 2032 bond, which implies the yield may not fall below this level, dealers said.

Amidst the banking sector crisis overseas, the market looked forward to the meeting of the Monetary Policy Committee for further clarity on the rate-hike trajectory back home. Traders still expected the domestic rate-setting panel to go for a 25-basis-point rate hike in April. They also largely expect the repo rate to top out at 6.75% after a final hike of 25 bps in April, dealers said. However, some dealers said that with each passing day, the number of people betting on a pause is slowly increasing.

According to data on RBI's Negotiated Dealing System-Order Matching platform, the turnover today was 388.20 bln rupees, compared with 349.45 bln rupees on Thursday. No trades were settled with the digital rupee pilot today. On Thursday, 50 mln rupees of trade were settled in one deal.

OUTLOOK

Gilts are not traded on Saturdays.

On Monday, bond prices are seen opening steady due to lack of significant domestic cues, dealers said.

Traders 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 7.25-7.35%.

India Gilts: Rise further tracking intraday fall in US yields

MUMBAI--1505 IST--Government bond prices continued to rise as US Treasury yields fell further during the day, dealers said. Yield on the benchmark 10-year US Treasury note fell to 3.33% from 3.38% in early trade and 3.50% on Thursday at the end of Indian market hours.

The gains in gilt prices, however, were capped as traders looked ahead to a large supply of gilts in the upcoming borrowing calendar for Apr-Sep, dealers said.

Some dealers speculated that state-owned banks sold their gilt holdings. "There is no genuine buying in the market right now. Gilts are seeing selling pressure," a dealer at a private bank said. "The caution of the huge upcoming supply is very much there in the market. Everybody is waiting to see how much will they frontload this time." 

Informist had exclusively reported on Mar 14 that the government may opt to conduct 55-58% of gross bond issuances for 2023-24 in Apr-Sep, according to a senior finance ministry official. In absolute terms, this amounts to 8.49-8.95 trln rupees. The government's gross borrowing target for 2023-24 (Apr-Mar) is 15.43 trln rupees.

Traders avoided aggressive bets as the market lacked any significant cues on the domestic front, dealers said. For the larger part of March, gilts tracked global cues, mainly US Treasury yields.

Dealers said till the new financial year begins in April, the government bond prices may move in a narrow range. Traders see the next psychologically crucial yield level at 7.31% for the 7.26%, 2032 bond, which implies that the yield may not fall below this level, dealers said.

The market also looked forward to the Monetary Policy Committee meeting to gain further clarity on the rate-hike trajectory back home. Traders still expected the domestic rate-setting panel to go for a 25-basis-point rate hike in April. They also largely expect the repo rate to top out at 6.75% after a final hike of 25 bps in April, dealers said. 

According to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform, the market-wide turnover was 251.45 bln rupees at 1500 IST, compared with 293.45 bln rupees at 1535 IST on Thursday.

For the rest of the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.38%. (Nishat Anjum)

India Gilts:Off highs as US ylds tad up; mkt lacks firm domestic cues

MUMBAI--1235 IST--Government bond prices were off the day's highs as US Treasury yields inched up during the day, dealers said. Prices remained in a narrow range as traders avoided aggressive bets due to lack of significant domestic cues. 

"We are tracking US Treasury yields tick by tick. Now, it has moved up to 3.40% (yield on the benchmark 10-year US Treasury note), our bond prices have all moved a bit down," a dealer at a private bank said. The yield on the benchmark 10-year US Treasury note rose to 3.41% during the day from 3.38% in early trade.

So far, the 10-year benchmark 7.26%, 2032 bond moved between the day's high of 99.55 rupees and low of 99.45 rupees. Similarly, most on-the-run gilts also had a difference of 11–12 paise between the day's high and low.

A large supply of gilts in the new financial year starting April weighed on gilts, keeping the gains limited, dealers said. Informist had reported on Mar 14 that the government might continue with the practice of front-loading its borrowing in the first half of the year, where it may opt to conduct 55-58% of gross bond issuances for 2023-24 in Apr-Sep, a senior finance ministry official told Informist. In absolute terms, this works out to 8.49-8.95 trln rupees. The government's gross borrowing target for 2023-24 (Apr-Mar) is 15.43 trln rupees.

"Soon, the gilt supply will start for the new financial year (starting April). There is a supply concern in the market and where the demand will come from for the gilts," the dealer said.

Government bond prices remained up tracking an overnight fall in US Treasury yields, dealers said. The yield on the benchmark 10-year US Treasury note fell to 3.38% on Thursday from 3.50% at the end of Indian market hours.

According to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform the market-wide turnover was 137.00 bln rupees at 1230 IST, compared with 174.05 bln rupees at 1230 IST on Thursday.

For the rest of the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.38%. (Nishat Anjum)

India Gilts: Rise as US yields fall; traders avoid aggressive bets

MUMBAI--0945 IST--Prices of government bonds rose today, tracking a fall in US Treasury yields. Traders avoided placing aggressive bets due to lack of firm domestic cues, dealers said.

The yield on the benchmark 10-year US Treasury note fell to 3.38% on Thursday from 3.50% at the end of Indian market hours. 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.

US yields plunged due to expectations that the federal funds rate may peak out soon, after the US Federal Open Market Committee hiked interest rates by 25 basis points on Wednesday.

Traders in the domestic market remained firm on expectations of a 25-bps rate hike by the Monetary Policy Committee in April, dealers said. "Similar to what happened yesterday (Thursday), we may see profit booking at 7.31-7.32% levels (yield on the benchmark 2032 bond)," a dealer at a private bank said. "There is overall positivity in the market because our rate hike expectation (by Reserve Bank of India) is still 25 bps."

Traders expect the domestic bond to trade within a narrow range till the outcome of the Monetary Policy Committee's policy review in April.

According to data on the Reserve Bank of India's Negotiated Dealing System--Order Matching platform--the market-wide turnover was 37.75 bln rupees at 0945 IST, compared with 79.35 bln rupees at 1005 IST on Thursday.

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.38%. (Kasthuri Akhil)

India Gilts: Seen rising tracking overnight fall in US yields

MUMBAI – Prices of government bonds are seen opening higher tracking an overnight fall in US Treasury yields, dealers said. US Treasury yields plunged as investors expect the US Federal Reserve to go slow on its policy tightening cycle going ahead.  

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.38% as against 7.35% on Thursday.

The yield on the benchmark 10-year US Treasury note fell 12 basis points to 3.38% on Thursday from Indian market close. 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.

Domestic traders hoped to gain more insight into the rate hike view in the US today as US yield movement usually stabilises a day later, after the Fed's policy review, dealers said. On Wednesday, the US Federal Open Market Committee raised the federal funds target range by 25 bps for the second straight meeting to 4.75-5.00%

Back home, traders still expected the Reserve Bank of India's Monetary Policy Committee to go for a 25 bps rate hike in April. The market also largely expects the repo rate to top out at 6.75% after a final hike of 25 bps in April, dealers said. Traders expected the domestic bond to trade in a narrow range till the Monetary Policy Committee's April policy review outcome.

Despite a sharp fall in US Treasury yields, traders expect a limited rise in domestic bond prices as they anticipate a large gilt supply in the new financial year starting Apr 1. This, as a result, may prevent the yield on the benchmark 2032 bond to fall below the psychologically crucial 7.30% mark, dealers said.

The government is expected to raise 8.49 trln rupees in the first half of the next financial year, slightly higher than 8.45 trln rupees it said it would borrow, according to several bond market participants who attended a meeting with the Reserve Bank of India, early March. (Kasthuri Akhil)

End

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

Edited by Vidhi Verma

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.