Indian Government bonds on weak note - ICICI Bank Treasury Research

Indian Government bonds opened on a weak note as RBI Governor Subbarao yesterday expressed concerns over inflation and current account deficit, thereby paring down bets on interest rate cuts. Lack of OMO buyback also weighed on the gilts market. However losses were pared as the Government reported FY2013 fiscal deficit at 4.9% of GDP, lower than Budget's estimate of 5.2%, thereby aiding sentiment. Meanwhile, auction of dated securities worth INR 150 bn saw mixed results. The auction cut-off yield on the 2030 bond (INR 30 bn) came in lower than consensus, while that on the 2041 bond (INR 30 bn), came in higher than consensus. The old benchmark 8.15% 2022 bond yield closed flat at 7.44% while the new 7.16% 2023 ended the day higher at 7.24%, as against yesterday's close of 7.19%.

India's call rate closed at 6.60%, lower than previous close of 6.75%. The RBI injected INR 494.75 bn (gross) (1st LAF) into the banking system today, as against INR 972.80 bn (gross) yesterday.

US Treasuries gained today on the back of their safe-haven allure amidst losses in global equities and caution ahead of US consumer spending data. Meanwhile, a downward revision to US Q1 GDP yesterday has also fuelled speculation that the Fed will not taper down its asset purchases anytime soon, thereby further supporting Treasuries. The benchmark 10-year yield is currently trading lower at 2.08% vs. yesterday's close of 2.11%. (17:00 IST)

Source : Equity Bulls

Keywords