• On Wednesday, the benchmark 10Y bond (6.94% GS 2036) opened 2bps higher at 7.21% tracking brent crude above $100 and 10Y UST near 5.31%. • Market participants-maintained caution ahead of the RBI Policy outcome. The Reserve Bank of India’s Monetary Policy Committee (MPC) unanimously increased the policy repo rate by 25 bps to 5.50%, while the decision to change the stance from ‘neutral’ to ‘calibrated tightening’ was taken by a 4-2 majority. • The 10Y IGB hardened to 7.26% after the announcement, then declined to 7.22% as the Governor did not announce immediate liquidity measures such as OMOs or a CRR change, which some market participants were expecting. • Over the day weakness was seen in INR amid strong dollar demand and global uncertainty, It closed at 96.76/$ with DXY hovering at 102.3. 10Y point closed the day 5 bps higher at 7.24% vs 7.19%. • Banking system liquidity remained in surplus at ~INR 5.3 Tn. RBI conducted overnight VRRR auction for INR 3 Tn to absorb excess liquidity, accepting INR 2.55 Tn at 5.24%.
