Macro and Government Bond Commentary: Yields edge lower with receiving in OIS; early strength in INR reverses importers’ demand • 10Y benchmark (6.79 GS 2034) opened lower tracking a fall in treasury yields overnight (in absence of swift tariff announcements). Moves lower in yields were also aided by a fall in crude oil prices as well as receiving in OIS across the curve. The 10Y point closed trade at 6.74% vs 6.76% prev. Spot INR was lower at 86.28 at 9AM tracking weakness in the DXY overnight but edged higher on demand from banks on behalf of importers. This led the pair to trade at 86.57 at 3:30pm. • RBI overnight VRR auction result: The RBI accepted bids for INR 719bn (against INR 1.50tn notified) at 6.52%. The central bank will conduct daily VRR of INR 1.25tn on 22nd Jan to manage outflows from monthly GST payments. • As on 20th Jan, system liquidity deficit was INR 2.36tn (without adjusting for daily CRR imbalances).
