Macro and Government Bond Commentary: Yields fall despite escalating geo-political tensions, surfeit liquidity creates chatter of an upcoming VRRR auction • The 10Y benchmark (6.79 GS 2034) opened slightly lower at 6.35% despite a rise in crude oil prices overnight (given escalating tensions between Israel and Iran). Yields were ranged with a mildly downward bias, with demand picking up early in the afternoon. There were certain media reports stating RBI having approached bond market participants to gauge comfort around the weighted average call rate. The liquidity has risen to 1.53% NDTL as on 13th Jun – this has created a chatter that the central bank may consider doing a VRRR auction to allow WACR around the repo rate. Despite this, the 10Y point closed trade at 6.33% vs 6.36% prev
