10-year paper seen trading between 7.85% and 8.00%
In the government bond market, sentiment has improved since the recent announcement of the increase in the FII government debt limit by $5 billion.
By Ananth Narayan, Managing director, Head Rates, Fx & Credit, South Asia
In the government bond market, sentiment has improved since the recent announcement of the increase in the FII government debt limit by $5 billion. Sentiment has also improved with the rupee’s consistent strength over the past few days, backed by capital inflows.
The weakness in dollar globally, indifferent US data and the eventual possibility of a second round of quantitative easing by the Fed are likely to transmit support to global bond markets. Post Friday’s auction, dealing data appears to indicate that trading desks have lightened positions, thereby providing some support to bond prices.
Deposit growth might also provide SLR demand from banks. However, persistent liquidity deficit, weekly auction supplies (including SDL) and strong domestic economic data (auto sales, asset prices, WPI, etc) should cap bond prices. Expect the 10-year bond prices to be in the range of 7.85-8.00% this week.
In the government bond market, sentiment has improved since the recent announcement of the increase in the FII government debt limit by $5 billion. Sentiment has also improved with the rupee’s consistent strength over the past few days, backed by capital inflows.
The weakness in dollar globally, indifferent US data and the eventual possibility of a second round of quantitative easing by the Fed are likely to transmit support to global bond markets. Post Friday’s auction, dealing data appears to indicate that trading desks have lightened positions, thereby providing some support to bond prices.
Deposit growth might also provide SLR demand from banks. However, persistent liquidity deficit, weekly auction supplies (including SDL) and strong domestic economic data (auto sales, asset prices, WPI, etc) should cap bond prices. Expect the 10-year bond prices to be in the range of 7.85-8.00% this week.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
