India bonds advance on RBI buying buzz, firm US debt
On Thursday morning, a notable rally in Indian government bonds caught the attention of investors, largely due to speculation that the Reserve Bank of India was maneuvering in the secondary market. Coupled with a strong performance from U.S. Treas...
By Reuters |
Indian government bonds built on a two-day rally early on Thursday on bets the Reserve Bank of India was buying in the secondary market, with added support from firmer U.S. Treasuries. The benchmark 10-year 6.48% 2035 bond yield was at 6.6416% by 10:30 a.m. IST, after ending at 6.6536% on Wednesday. The yield has fallen about 3 basis points over two sessions.
Speculation picked up after clearinghouse data showed investors classified as "others", including insurers, pension funds, corporates and the RBI, bought a net of 65.7 billion rupees worth of bonds on Tuesday and Wednesday. RBI purchase data for the week ended January 16 is due on Friday.
"Market is positive due to "others" buying so far, but it is definitely not in a shape where regulators can leave it to participants wholly," a private-bank trader said.
"Some on-screen buying or additional open market operations must continue to aid demand." Market sentiment has otherwise remained muted after Bloomberg Index Services delayed India's inclusion in its flagship index, and as investors brace for the February. 1 federal budget, with expectations of a record borrowing calendar.
The central bank is also scheduled to buy bonds worth 500 billion rupees later in the day. Traders remain hopeful that the central bank will announce additional purchases for up to 2 trillion rupees over the next two months. Separately, the U.S. 10-year yield eased over 4 basis points to 4.2508%, as risk sentiment improved after President Trump scaled back its tariff threat on Europe.
India's overnight index swap rates saw some receiving driven by easing U.S. yields. The one-year OIS inched down to 5.57%, while the two-year swap rate fell 1 bp to 5.6850%. The five-year OIS rate lowered slightly to 6.08%.
($1 = 91.5850 Indian rupees)
Speculation picked up after clearinghouse data showed investors classified as "others", including insurers, pension funds, corporates and the RBI, bought a net of 65.7 billion rupees worth of bonds on Tuesday and Wednesday. RBI purchase data for the week ended January 16 is due on Friday.
"Market is positive due to "others" buying so far, but it is definitely not in a shape where regulators can leave it to participants wholly," a private-bank trader said.
"Some on-screen buying or additional open market operations must continue to aid demand." Market sentiment has otherwise remained muted after Bloomberg Index Services delayed India's inclusion in its flagship index, and as investors brace for the February. 1 federal budget, with expectations of a record borrowing calendar.
The central bank is also scheduled to buy bonds worth 500 billion rupees later in the day. Traders remain hopeful that the central bank will announce additional purchases for up to 2 trillion rupees over the next two months. Separately, the U.S. 10-year yield eased over 4 basis points to 4.2508%, as risk sentiment improved after President Trump scaled back its tariff threat on Europe.
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India's overnight index swap rates saw some receiving driven by easing U.S. yields. The one-year OIS inched down to 5.57%, while the two-year swap rate fell 1 bp to 5.6850%. The five-year OIS rate lowered slightly to 6.08%.
($1 = 91.5850 Indian rupees)
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