Macro and Government Bond Commentary: Yields little changed in absence of fresh cues, liquidity deficit set to widen • 10Y benchmark (6.79 GS 2034) opened mildly higher with global benchmarks (given stronger than expected US housing starts and building permits). Moves higher in yields did not extend further despite weakness in INR (to do with banks’ dollar demand for imports). The 10Y point closed trade at 6.76%. • RBI overnight VRR auction result: The RBI accepted bids for INR 757.72bn (against INR 1.25tn notified) at 6.52%. The central bank will conduct daily VRR of INR 1.50tn on 21st Jan to manage outflows from monthly GST payments. • As on 17th Jan, system liquidity deficit was INR 1.95tn (without adjusting for daily CRR imbalances). Conditions will tighten from here on account of GST outflows
