• On Tuesday, the 10-year benchmark government bond (6.94% GS 2036) opened 1 bp lower at 6.77%, supported by higher than expected inflows into FCNR(B) deposits. • Yesterday Post market hours the RBI released data showing that its early June measures to attract foreign capital had garnered inflows of $20.72 Bn as of July 17, including $17.41 Bn in FCNR(B) deposits, well above the market forecasts of around $10 Bn. • However, the 10Y IGB yield hardened from 6.76% to 6.79%, tracking higher crude oil prices ($90/bbl) and 10Y UST yield at 4.60%. • The cut offs for weekly SDL auction came broadly on expected lines, with 10Y Assam coming at 7.56%, 15Y Tamil Nadu at 7.5897% and 21Y West Bengal at 7.71%. • The latest banking system liquidity stayed in surplus of ~INR 695 Bn. The 10Y point closed 1 bp up at 6.79% vs 6.78%.
