Yields end the day flat • On Friday, the 10-year benchmark government bond (6.33% GS 2035) opened 2bp higher at 6.63% tracking the weakness in INR. • Over the day, market participants covered their short positions ahead of the weekly IGB auction. The auction cut-off came broadly in line with expectations; RBI offered 6.68% GS 2040 at 7.0250% for INR 160Bn and 6.90% GS 2065 at 7.4340% for INR 120Bn. • However, gains in government securities were capped by the weakness in the rupee. The INR hit a fresh lifetime low of 90.56/$ but eventually settled at 90.42/$, marking its lowest-ever closing level. • Meanwhile, bond prices were little changed after India's CPI inflation for November came at 0.71%, as it was in line with consensus. The CPI print came slightly higher compared to 0.25% in October because of fading base effect amid pick up in food inflation especially vegetables. The core inflation fell to 4.3% from 4.4% in October amid pass through of lower GST rates. • The 10Y point closed flat at 6.61%.
