Macro and Government Bond Commentary: Yields rise with weak auction results, liquidity deficit narrows as RBI’s OMO purchases picks up • The 10Y benchmark (6.79 GS 2034) opened little changed at 6.68% despite a fall in treasury yields overnight (in line with US Q4 GDP missing expectations). Yields were ranged in the morning but rose later in the day following weaker than expected auction results. The 10Y point closed trade at 6.70% vs 6.68% prev. • Weekly auction results: RBI sold 6.79 GS 2031 at 6.70% for INR 100 bn, 7.34 GS 2064 at 7.06% for INR 150bn, and devolved 6.79 GOI SGrB 2034 (of INR 39.45bn) on PDs. • RBI WSS showed outright OMO purchases in secondary market of INR 208.50bn in the 24th Jan week. • As on 30th Jan, system liquidity deficit was INR 2.2tn likely (without adjusting for daily CRR imbalances)
