• On Tuesday, the 10-year benchmark (6.94% GS 2036) opened 1 bps higher at 6.96% tracking the rise in 10Y UST yields to 4.78% levels. • The 10Y UST hardened to 4.78% as surging oil prices revived inflation concerns, while Fed Chair Warsh’s hawkish tone at Jackson Hole raised expectations of further rate hikes in upcoming Fed policy. • The 10Y IGB traded in the range of 6.94%-6.96% ahead of the weekly SDL auction. The cut offs for SDL auction came broadly on expected lines with 10Y TN coming at 7.6123%, 15Y TN at 7.7044% and 25Y UP at 7.77%. • The INR appreciated on likely RBI intervention, closing at 94.95/$, with DXY hovering around 99.5 levels. The 10Y point closed the day 1 bp higher at 6.96% vs 6.95%. • Banking system liquidity remained in surplus at ~INR 6.6Tn. RBI conducted multiple VRRR auctions to absorb excess liquidity.
