• On Tuesday, the 10-year benchmark (6.94% GS 2036) opened steady at 6.96% ahead of the weekly SDL auction. • Over the day, Brent crude rose to around $99.4/bbl amid heightened Middle East tensions following Houthi attacks on Saudi energy infrastructure. The 10Y IGB touched 6.97%, tracking the intraday rise in crude oil prices above $99/bbl. • The cut off for the SDL auction came broadly on expected lines, with 10Y GJ coming at 7.59%, 15Y GJ at 7.68% and 30Y AP at 7.76%. • Banking system liquidity remained in surplus at ~INR 10.3 Tn. RBI conducted overnight VRRR auction for INR 5 Tn to absorb excess liquidity, accepting INR 4.17 Tn at 5.24%. • 10Y IGB yields eased towards the end of the session as record surplus liquidity in the banking system supported bond prices, while market participants remained watchful for further RBI measures to absorb the excess liquidity. The 10Y point closed the day 2 bps lower at 6.94% vs 6.96%.
