• On Tuesday, the 10Y benchmark (6.94% GS 2036) opened steady at 7.05%, ahead of the weekly SDL auction. • Over the day, the 10Y IGB eased to around 7.01%, tracking the intraday decline in Brent crude oil prices to $97.5/bbl and easing in the 10Y UST yield to 4.93%. • Brent crude declined intraday towards $97.5/bbl following reports that Iran offered to reopen the Strait of Hormuz within seven days if the US takes initial steps to ease military pressure, easing concerns over potential supply disruptions. • The cut offs at the weekly SDL auction came in broadly on expected lines, with MH 5Y coming at 7.33%, GJ 10Y at 7.72% and 15Y GJ at 7.83%. The 10Y point closed the day 4 bps lower at 7.01% vs 7.05%. • Banking system liquidity remained at surplus of around INR 4.9 Tn. RBI conducted overnight VRRR auction for INR 0.75 Tn to absorb excess liquidity, accepting INR 0.72 Tn at 5.24%.
