• On Thursday, the benchmark 10Y bond (6.94% GS 2036) opened 1 bp higher at 7.20%, tracking the rise in 10Y UST to 5.30% post better than expected Q2 GDP data. • The US Q2 GDP growth was revised up to 2.2% from 1.5% previously, beating expectations of 1.5%. • The 10Y IGB yield hardened to 7.22% ahead of the weekly auction, tracking an intraday rise in the 10Y UST yield to 5.34% and weakness in the INR, which depreciated to 96.2/$ levels. • Cut-offs at the weekly IGB auction were largely in line with market expectations. However, the 3-year paper (6.20% GS 2029) witnessed a weaker-than-expected cut-off at 6.7688%. The 10Y point closed 2 bps higher at 7.21% vs 7.19%. • Banking system liquidity remained in surplus at ~INR 4.6 Tn. RBI conducted 4 day VRRR auction for INR 2 Tn to absorb excess liquidity, accepting INR 1.68 Tn at 5.24%. INR closed at 96.31/$ with DXY hovering around 101.6 levels.
