Macro and Government Bond Commentary: Yields mildly higher with INR slipping to fresh all-time low, system liquidity in deficit zone • 10Y benchmark (7.10 GS 2034) opened mildly higher at 6.81% likely with local currency at a fresh all-time low level. Yields were ranged through the day in absence of any other fresh cues, with most participants away for Christmas and year-end festivities. The INR slipped further in the day in absence of aggressive RBI intervention. The 10Y point closed trade at 6.82% vs 6.81% prev. • As on 24th Dec, system liquidity deficit widened further to INR 2.04tn (without adjusting for daily CRR imbalances). This is after monthly GST outflows. Conditions should start improving this week on month-end GOI spending as well as on the pending 25 bps CRR cut.
