• On Wednesday, the 10-year benchmark government bond (6.94% GS 2036) opened flat at 6.83% tracking an overnight movement in Brent crude oil. • Over the day, the 10Y yield stayed lower as traders increasingly believed the Reserve Bank of India's Monetary Policy Committee would not hike the repo rate in 2026 following Governor Sanjay Malhotra's comments. Malhotra said it was premature to talk about repo rate hikes by the MPC in the coming months and said policymakers had taken a conscious decision not to signal rate hikes by keeping the policy stance at 'neutral' at the June monetary policy review. • The RBI offered 91-day T-bill at a cut-off rate of 5.2476%, 182-day T-bill at a 5.4499% and 364-day T-bill at 5.6387%. • Indian rupee settled slightly higher against the dollar on likely FII inflows into local stocks. INR ended at 94.66/$ vs 94.74/$. • The 10Y point closed 5bps lower at 6.78% vs 6.83%. The latest banking system liquidity stands in deficit of ~INR 148.24 Bn.
