• On Tuesday, the benchmark 10Y bond (6.94% GS 2036) opened flat at 7.21%, as participants-maintained caution ahead of RBI MPC policy outcome tomorrow. • The 10Y traded in a narrow range of 7.21%-7.22% ahead of the weekly SDL auction, while an intraday decline in Brent crude to around $99/bbl provided some support to market sentiment. • The cut offs at the weekly SDL auction were broadly on expected lines with 10Y MP coming at 7.91%, 17Y MH at 8.01% and 21Y WB at 8.07%. • Towards the end of the session, the benchmark 10Y IGB yield eased to 7.19%, tracking a decline in Brent crude prices to around $98/bbl amid easing supply concerns. The 10Y point closed the day 2 bps lower at 7.19% vs 7.21%. • Banking system liquidity remained in surplus at ~INR 5.3 Tn. RBI conducted overnight VRRR auction for INR 2.5 Tn to absorb excess liquidity, accepting INR 1.9 Tn at 5.24%.
