Macro and Government Bond Commentary: Yields continue lower as markets position for a 25 bps rate cut in Feb, liquidity deficit narrows considerably • The 10Y benchmark (6.79 GS 2034) opened little changed at 6.66% with a fall in treasury yields overnight (following worse than expected US ADP payrolls). Yields were ranged for much of the day, with markets positioned for a 25-bps rate cut by the RBI MPC this Friday. The 10Y point closed trade at 6.66%. • T-bill auction results: RBI sold 91-days T-bills at 6.47% for INR 120bn, 182-days T-bills at 6.58% for INR 80bn, and 364-days T-bills at 6.54% for INR 80bn. • As on 04th Feb, system liquidity deficit narrowed to INR 382bn likely on account of buy-sell swap (USD 5bn) as well as on month-end GOI spending
