Macro and Government Bond Commentary: Yields rise with 25 bps RBI MPC rate cut perceived to be cautious, delay in revised LCR norms • The 10Y benchmark (6.79 GS 2034) lower ahead of the RBI MPC policy meeting. The RBI MPC unanimously voted to cut policy rates by 25 bps – in line with consensus. However, yields started rising following the outcome, with the overall tone perceived to be slightly cautious, with a neutral stance maintained. The governor refrained from giving any guidance of choice of instruments to inject liquidity, but did ensure to maintain adequate (overnight and durable) liquidity. Moves higher in yields were also on account of delayed implementation of revised LCR norms (announced in Jul circular). The remarks on keeping conditions less restrictive – was meant for the current policy, and not as a guidance. The 10Y point closed trade at 6.76% vs 6.72% prev.
