10-year yields may take out 8.50% this week
Ten-year yields, which ended last week at 8.42%, could look to take out 8.50%.
Updated:
The money markets have been facing a persistent liquidity shortage. However, the cash reserve ratio ( CRR) cut of 75 bps announced earlier, with effect from this fortnight has released enough cash to take care of the advance tax outflows.
The call money market will remain tight this week, with rates above repo rates and trade at around 9%. We will see further outflows of Rs 12,000 crore on account of treasury bill auctions and a smaller amount of Rs 1,200 crore of state auctions. However, with this week being the reporting week, the markets had built buffers ahead of tax outflows and thus rates overall should remain steady. Banks have been raising short-term money at high rates.
Three-month CDs are being issued at around 11.25% and one-year at around 10.75%.
Commercial paper rates are around 25 basis points higher and these high rates are expected to prevail at least till the month end. The next fiscal year’s budgeted gross borrowing numbers of Rs 5.7 lakh crore and net of Rs 4.79 lakh crore have spooked the G-Sec market, coming in well over 10% higher than this year’s number. Ten-year yields, which ended last week at 8.42%, could look to take out 8.50%.
Harihar Krishnamoorthy
Head, Treasury
FirstRand Bank
The call money market will remain tight this week, with rates above repo rates and trade at around 9%. We will see further outflows of Rs 12,000 crore on account of treasury bill auctions and a smaller amount of Rs 1,200 crore of state auctions. However, with this week being the reporting week, the markets had built buffers ahead of tax outflows and thus rates overall should remain steady. Banks have been raising short-term money at high rates.
Three-month CDs are being issued at around 11.25% and one-year at around 10.75%.
Commercial paper rates are around 25 basis points higher and these high rates are expected to prevail at least till the month end. The next fiscal year’s budgeted gross borrowing numbers of Rs 5.7 lakh crore and net of Rs 4.79 lakh crore have spooked the G-Sec market, coming in well over 10% higher than this year’s number. Ten-year yields, which ended last week at 8.42%, could look to take out 8.50%.
Harihar Krishnamoorthy
Head, Treasury
FirstRand Bank
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