Macro and Government Bond Commentary: Yields fall on hopes around liquidity infusion measures, RBI announces INR 600bn OMO purchase, buy-sell swap & 56-day VRR • 10Y benchmark (6.79 GS 2034) opened lower at 6.68% on hopes that the RBI may conduct operations to ease liquidity conditions (after it purchased bonds of over INR 100bn in the 17th Jan week). Yields were ranged for the rest of the day, with the 10Y point closing trade at 6.68% vs 6.72% prev. • The RBI announced OMO purchase auctions in three tranches of INR 200bn each to be held on 30th Jan, 13th Feb and 20th Feb respectively. In addition, they will also conduct a 56-day VRR auction of INR 500bn on 7th Feb. The central bank will also conduct a buy-sell swap auction (6-month tenor) of USD 5bn on 31st Jan’25. On 30th Jan, the central bank will buy securities in the 2029-2037 maturities (tenor wise amount was not notified). • As on 24th Jan, system liquidity deficit narrowed to INR 2.82tn likely on account of central bank secondary market outright purchases over the last few sessions (as reflected from a sharp pickup in net buying activity from the ‘others’ segment).
