Macro and Government Bond Commentary: Yields reverse early downside on profit-booking, liquidity slips into deficit • 10Y benchmark (7.10 GS 2034) opened lower at 6.84% tracking a fall in crude oil prices overnight. This downside did not sustain despite sharp moves lower in treasury yields, with markets positioning for US PCE inflation scheduled on Wednesday. The 10Y point closed trade at 6.86%. • As on 25th Nov, system liquidity slipped into a deficit of INR 69.56bn (without adjustments to daily CRR imbalances). This was after monthly GST outflows in Nov (for Oct economic activity) as well as anecdotes RBI FX intervention. Liquidity conditions should ease this week with month-end GOI spending coming in.
