All
 

 

Just in:  

You are here: Home»Markets»Fixed Income»Asia»India bond yields, near-end swaps at 7-week low on hopes of RBI easing

indian-bondMUMBAI: Indian bond yields and near-end swaps fell to seven-week lows on Monday on hopes that the central bank will cut the cash reserve ratio (CRR) and signal a rate cut as early as January at its policy review on Tuesday.

 

Strong October factory output data and a surprise fall in headline inflation in November have cemented hopes the Reserve Bank of India will stick to its previous guidance of a rate cut in the January-March quarter.

 

The absence of an open market operation so far this week has also raised expectations the RBI will lower the CRR, with repo bids surging to an over 8-month high on advance tax outflows.

 

Analysts added a surprise rate cut remained a possibility. Goldman Sachs took a contrarian stance by forecasting a 25 basis points cut in the repo rate on Tuesday, arguing November inflation data on Friday had been much weaker than expected.

 

"With both growth and inflation surprising on the downside relative to the RBI's forecast, there is a reason for the central bank to move earlier than its previous guidance," Goldman economist Tushar Poddar wrote in the note.

 

The benchmark bond yield ended unchanged at 8.14 percent. It fell to 8.13 percent in session, its lowest since Oct. 30.

 

India's short-end 1-year OIS rate ended flat at 7.62 percent, after falling to 7.61 percent, a seven-week low.

 

The benchmark 5-year OIS ended 1 bp lower at 7.10 percent.

 

Interest rate swaps are pricing in about 43 basis points of rate cuts in 3 months and about 96 basis points in 1-year, dealers said.

 

"In case we get a surprise rate cut, there will be receiving across the board with front end getting received the most," said Vivek Rajpal, fixed income strategist at Nomura.

 

He said the 5-year government paper may see the biggest rally, with yields dropping as much as 15-20 basis points in case of a rate cut.

 

The RBI has refrained from cutting interest rates since delivering a 50-basis-point easing in April, citing inflation as too high for its comfort.

 

India's fiscal deficit has also been a concern for the RBI.

 

The government said on Monday meeting its 5.3 percent fiscal deficit target for the fiscal year would be a challenge, while cutting its growth forecast for the year.

 

Copyright Reuters, 2012
**


 



 
Index Closing Chg%
Arrow DJIA 16,982.59 0.13
Arrow Nasdaq 4,444.91 0.10
Arrow S&P 1,978.91 0.03
Arrow FTSE 6,788.07 0.05
Arrow DAX 9,598.17 0.48
Arrow CAC-40 4,344.77 0.33
Arrow Nikkei 15,529.40 0.46
Arrow H.Seng 24,428.63 0.88
Arrow Sensex 25,991.23 0.52





where to buy

cheap wedding dresses

online - weddingdresstrend.com

Buy cheap Nike Mercurials cleats at mercurialscleats.com
cheap wedding dresses on SiteSteer.com - Best Online Wedding Store


Banking Review 2013


Buy direct from

China free shipping trade platform

Annual2012/13
Foreign Debt $60.9bn
Per Cap Income $1,368
GDP Growth 3.6%
Average CPI 7.5%
MonthlyMay
Trade Balance $-1.558 bln
Exports $2.117 bln
Imports $3.675 bln
WeeklyJuly 10, 2014
Reserves $14.638 bln