10-year Paper Yields Seen at 8.40-8.50%.
This week, yields on the 10-year benchmark government bonds will range between 8.40% and 8.50%.
Updated:
Roy Paul
DGM, Treasury Federal Bank
This week, yields on the 10-year benchmark government bonds will range between 8.40% and 8.50%. I don’t expect the yields to breach the 8.5% levels because, even though market fundamentals are not as rosy, markets expect RBI to stop after another round of rate hike of about 25 basis points.
Moving ahead, I believe LAF, or liquidity adjustment facility, will turn positive over the next three months since there is building up of deposits in the system, due to the hike in deposit rates, and credit has not picked up at the same rate. The CD, or credit deposit, ratio is around 54%. Liquidity will continue to remain tight and the average borrowing from RBI’s repo window would be between Rs 40,000 crore and Rs 50,000 crore. Due to risk aversion, people may prefer bank deposits over other forms of investment.
The rates on certificate of deposits should hover around 9.80-9.90%. There may not be too many issuers in the market due to the CD ratio being what it is and the quarterend pressure having eased. Re-pricing may only happen in September now.
DGM, Treasury Federal Bank
This week, yields on the 10-year benchmark government bonds will range between 8.40% and 8.50%. I don’t expect the yields to breach the 8.5% levels because, even though market fundamentals are not as rosy, markets expect RBI to stop after another round of rate hike of about 25 basis points.
Moving ahead, I believe LAF, or liquidity adjustment facility, will turn positive over the next three months since there is building up of deposits in the system, due to the hike in deposit rates, and credit has not picked up at the same rate. The CD, or credit deposit, ratio is around 54%. Liquidity will continue to remain tight and the average borrowing from RBI’s repo window would be between Rs 40,000 crore and Rs 50,000 crore. Due to risk aversion, people may prefer bank deposits over other forms of investment.
The rates on certificate of deposits should hover around 9.80-9.90%. There may not be too many issuers in the market due to the CD ratio being what it is and the quarterend pressure having eased. Re-pricing may only happen in September now.
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
