During last month, domestic yield witnessed an up movement driven by rise in inflation, fall in liquidity and Fed indication about further rate hike. However, g-sec yield got corrected after that.
Regarding domestic inflation, the RBI Governor has said that inflation during August will remain elevated. It is expected to ease from September.
System liquidity has moved to surplus level again after staying in the deficit zone for a short while. As of 31st August, it stood at Rs 802 billion.
Fiscal deficit- During Apr-July 23, India’s fiscal deficit stood at 33.9% of full year target for FY24. In absolute terms, it stood at Rs 6.06 trillion during the mentioned period.
GDP growth-Domestic economy expanded by 7.8% during Q1FY24 on yearly basis as compared to 13.5% during Q1FY23.
Government bonds, SDL and OIS yield movements
On a weekly basis, 7.18% 2033 yield declined by 4 bps to 7.14%. The 10-year benchmark 7.26% 2033 yield decreased by 3 bps to 7.17%. 7.06% 2028 yield declined by 4 bps to 7.16%. 5.63% 2026 yield came down by 3 bps to 7.16%. Long-term paper, 7.25% 2063 yield lost 2 bps to 7.33%.
The spread of 10-year bond over 5-year bond remained at 1 bp as compared to the previous week. The 15-year benchmark over 10-year benchmark rose to 8 bps as compared to 7 bps while the 30-year benchmark over 10-year benchmark spread stood unchanged at 16 bps on a weekly basis.
10-yr SDL auction cut-off yield declined to 7.44% from 7.49% in previous week while spread decreased to 26 bps from 27 bps.
On a weekly basis, 1-year OIS yield declined by 4 bps to 6.97% while the 5-year OIS yield decreased by 7 bps to 6.57%.
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