Bond yields, which ended at 6.82% were down by three basis points, since its previous close at 6.85%, Clearing Corporation of India data showed.
“US treasury yields came down by 6-7 basis points due to the crash in crude oil prices yesterday. If the US CPI data comes below expectation, then we can see similar levels, or yields may even go down”, said a bond trader at a Primary Dealership.
US Ten-year Treasury yields fell to 3.6068%, the lowest since June 2023, according to Reuters.
Global oil benchmark Brent crude futures settled at their lowest level since December 2021 on Tuesday, after OPEC+ revised down its demand forecast for this year and 2025. There were also supply concerns from Tropical Storm Francine approaching across the Gulf of Mexico, driving operators to shut in around a quarter of offshore crude production.
The focus remains on US consumer price index (CPI) data expected on Wednesday after market hours. Inflation in the US, as measured by the change in the Consumer Price Index (CPI), declined to 2.5% on a yearly basis in August from 2.9% in July, the US Bureau of Labor Statistics. The banking system liquidity, as measured by net absorption of funds by the RBI, stood at a surplus of Rs. 1.08 lakh crore, as of September 10th, Central Bank data showed. The weighted average call rate, which indicates banks’ overnight cost of borrowing, closed at 6.54% on Wednesday according to CCIL, four basis points above the Reserve Bank of India’s current repo rate, despite surplus liquidity conditions in the banking system, money market dealers said.
The WACR, which is the operating target of the RBI’s monetary policy, was at 6.50% the previous day. The WACR eases when liquidity conditions in the banking system is in a surplus mode.
The government raised Rs 20,000 crore through the sale of 91-day, 182-day and 364-day Treasury bills (T-bills) in an auction carried out by the RBI. The cut off yield for 91 day T-bill was 6.64%, while for 182 day T-bill was 6.72%. For 364 day T-bill, the cut off yield stood at 6.70%
