Informist, Tuesday, Jun 6, 2023
By Anjali
NEW DELHI – Overnight indexed swap rates ended lower today, tracking a fall in US Treasury yields, dealers said. The swap rates moved in a narrow range after falling initially.
The one-year swap rate ended at 6.58%, against 6.59% on Monday, while the five-year swap rate ended at 6.04% against the previous day's close of 6.07%.
Yields on US Treasury notes with tenure below 10 years fell on Monday after data showed new orders slowed in May as the prices businesses pay for inputs fell to a three-year low, suggesting the US Federal Reserve's efforts to curb high inflation to cool the economy might be working. Yields on long-term Treasury notes remained largely unchanged.
The yield on the benchmark 10-year US Treasury note fell to 3.70% in Asian trade today from 3.76% at the close of Indian markets on Monday.
On the domestic front, traders now await the policy review decision of the Reserve Bank of India's Monetary Policy Committee at the end of its three-day meeting on Thursday. The market widely expects the domestic rate-setting panel to keep the repo rate unchanged at 6.50%, dealers said.
Traders were also cautious as the market remains divided about the prospects of the committee retaining its stance in its policy decision on Thursday, dealers said.
"It is known event, only the stance will have to be monitored," a dealer at a primary dealership said. "The market will move only if the Reserve Bank of India comes up a surprise."
Meanwhile, the swap market has started pricing in rate cuts starting December, dealers said. "Looking at the OIS curve, one can say that there could be one rate cut in this financial year," a dealer at a private bank said. "It could be either in December or February."
OUTLOOK
On Wednesday, swap rates are seen opening steady due to lack of significant domestic cues, dealers said.
Traders will watch out for any sharp movement in US Treasury yields and crude oil prices at open.
The swap rate in the one-year segment is seen at 6.50-6.65%, and the five-year at 5.95-6.15%.
| At 1700 IST | Monday |
1-year OIS | 6.58% | 6.59% |
2-year OIS | 6.23% | 6.25% |
5-year OIS | 6.04% | 6.07% |
2-year MIFOR | 6.66-6.78% | 6.70-6.82% |
5-year MIFOR | 6.70-6.82% | 6.75-6.87% |
End
Edited by Manisha Baxla
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. 2023. All rights reserved.
