Yields end the day lower • The 10-year benchmark government bond (6.33% GS 2035) opened 2bp lower at 6.59% on Monday after the RBI included IGB 6.33% 2035 gilt at this week’s OMO auction. • Over the day, the 10Y yield firmed up to 6.63% as Indian rupee hit fresh record low of 90.79/$ as banks bought dollars to cover foreign fund outflows from Indian equities amid uncertainty over a potential India-US trade deal. The rupee eventually settled at 90.73 per dollar, marking its lowest-ever closing level. • However, few traders covered short-bets and the 10Y point closed 2 bp lower at 6.59% vs 6.61%. • The focus will be on tomorrow’s SDL auction where the states would raise slightly higher than indicated in the calendar. 10 states will raise INR 178.50 Bn compared to indicated amount of INR 176.90 Bn in states' borrowing plan for Oct-Dec. • The latest banking system liquidity stands in surplus of ~INR 2135.34 Bn. RBI conducted overnight VRR for INR 750 Bn and partially subscribed at 5.26%.
