Thursday, December 8, 2011

Bond/OIS market update (8th Dec)

10Y bond yield hit a low of 8.5250% jus short of lower end of set near term range of 8.50-8.75%. Now, let us allow consolidation at 8.50-8.65%. This range holds good till RBI continues with its OMO operations to match week-on-week bond supplies. Delivery of CRR cut on 16th December and build up of rate cut expectations by end Jan 2012 will set up an extended rally into 8.35-8.25%.

1Y OIS rate moved below 7.90% and looks set for extension into 7.75% while 7.95% holds.

5Y OIS rate moved below 7.15% and looks good for extension into 7.05-7.0% while 7.20% holds

Moses Harding

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