Gilts continued to trade volatile and remained under pressure - ICICI Bank : Treasury Research

The gilts continued to trade volatile and remained under pressure amidst continued implication of the RBI's liquidity tightening measures. The closely watched dated securities auction witnessed weak demand, with the cut off yield coming in higher than market expectations for most securities and some devolvement also witnessed. The cut off yield for the benchmark 7.16% 2023 bond came in at 8.0529%, with devolvement to the tune of INR 10.48 bn. However, the sentiment though received some support from the Prime Minister's comments that the RBI measures are likely to be withdrawn once the short term pressures on the Rupee ease. The benchmark bond yield traded volatile in a range of 7.90-8.07% and finally ended the session at 7.94% as against previous close of 7.99%.

India's call rate closed at 6.00% as against previous close of 6.25%. The RBI injected INR 568.06 bn (gross) into the banking system today, as against INR 750.01 bn (gross) yesterday.

US Treasuries are trading little changed today on profit booking following significant gains yesterday. Meanwhile, a revision of US AAA credit rating by Moody's to stable from negative aided the Treasuries. However, better than expected Philadelphia Fed Index and a decline in initial Jobless claims weighed on the Treasuries. The 10-year yield is currently trading at 2.53%, unchanged from yesterday's close.(17:30 IST)

Source : Equity Bulls

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