Updates

US TREASURIES
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US Treasury yields rose tracking a rise in German bund yields. Support from yield hunters, who normally flock to US debt when European sovereign bond yields fall, was taken away as German yields rose.
–10-year bond yield: 2.14% Monday vs 2.12% Friday.

CURRENCIES
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EUR/USD: The dollar rose against the euro, as a rise in US Treasury yields drew foreign investor inflows.
–$1.1139 per euro today vs $1.1148 Monday; $1.1200 Friday

USD/JPY: The dollar strengthened against the yen, as against a host of other currencies on foreign inflows due to higher Treasury yields.
–120.16 yen per $1 today vs 120.12 Monday; 120.15 Friday.\

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COMMODITIES

CRUDE OIL: Futures settled lower on Monday as weak Chinese manufacturing data weakened demand prospects from the major oil importer. The HSBC Purchasing Manager’s Index for China fell to 48.9 in April from the March level of 49.6. This is the lowest level for the index since April last year.
–NYMEX Jun futures (a barrel): $58.93 Monday vs $59.15 Friday
GOLD: Futures settled higher on Monday after the recent weakness in economic data out of the US increased demand for the safe-haven metal. Comments from Federal Reserve Bank of Chicago President Charles Evans that interest rates in the US should not be hiked until early 2016 also boosted the commodity’s price. A hike in rates leads to a strengthening of the dollar, making
commodities such as gold expensive for foreign investors.
–COMEX Jun futures (a troy ounce): $1,186.80 Monday vs $1,174.50 Friday.

Market update’s

MARKETS
Call : Seen opening near repo rate as banks may borrow to meet reserve needs in session. 1-day call 7.00-7.50% vs 6.60-6.65% Mon.

Bonds : Seen opening steady before release of RBI policy statement. To take cues from RBI stance. 10-year bond yield: 7.65-7.75% vs 7.72% Mon.

Rupee : To take opening cues from US economic data and NDF rates. RBI monetary policy statement eyed. Range: 61.90-62.22/$1 vs 62.19/$1 Mon.

Stocks: To open up on positive global cues; RBI policy eyed Nifty range: 8580-8750, Mon-end: 8659.90, up 73.65 points or 0.9%.

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COMMODITIES , CURRENCIES & US TREASURIES.

COMMODITIES
CRUDE OIL: Crude oil futures ended marginally higher Tuesday and traded near its two-week high, as investors expected an increase in demand due to a positive manufacturing data released in the US. However, a sharp rise was limited on caution ahead of release of US petroleum supply data by the Energy Information Administration for the week ended Mar 20.
–NYMEX May futures (a barrel): $47.51 Tuesday vs $47.45 Monday.
GOLD: Gold futures rose for the fifth consecutive session on Tuesday amid volatility in the equity markets and uncertainty over Greece’s bailout.
–COMEX Apr futures (a troy ounce): $1,191.40 Tuesday vs $1,187.70 Monday.

CURRENCIES
EUR/USD: The euro was trading marginally up against the greenback on a slew of positive economic data. The euro zone composite PMI was higher than expectations as well as the
previous month’s number at 54.1. German flash composite PMI in March was 55.3, as against 54.3 in February.
–$1.0927 per euro today vs $1.0918 Tuesday; $1.0945 Monday.
USD/JPY: The Japanese yen was trading marginally up ahead of the release
of the Japan services producer price index data for February.
–119.69 yen per $1 today vs 119.73 Tuesday; 119.69 Monday.

US TREASURIES
Treasury prices ended higher Tuesday after falling briefly during the session after data released by the US Labour Department showed that Consumer Price Index-based inflation increased 0.2% in February, as against a fall of 0.7% in January. According to investors, market participants shrugged the positive economic data, as they are still taking cues from the Federal Reserve’s
cautious stance in hiking interest rates. The rise in inflation in the US came, after three subsequent months of a fall in CPI, due to a marginal recovery in crude oil prices. Better-than-expected new residential unit sales in the US, which rose 7.8% in February to 539,000, failed to lift investor sentiment.
–10-year bond yield: 1.88% Tuesday vs 1.92% Monday.

Market News

COMMODITIES
CRUDE OIL: Futures recovered on Monday, with prices reclaiming the $50 per barrel mark after having declined sharply last week on account of a globally strengthened US dollar and increased US supplies.
–NYMEX Apr futures (a barrel): $50.00 Monday vs $49.61 Friday

GOLD: Futures settled higher on Monday, after registering a sharp fall on Monday, as concerns regarding the repayment of Greece’s eurozone debt led to increased investor appetite for the safe-haven asset. Monday, eurozone finance ministers told Greece to quicken discussions with its creditors on an economic reform program, required to enable the next round of monetary aid for the debt-ridden country.
–COMEX Apr futures (a troy ounce): $1,166.50 Monday vs $1,164.30 Friday

MARKETS
Call : May open tad above repo rate as banks may borrow funds to cover reserve needs early in session. 1-day Call 7.60-7.65% vs 7.70-7.75% Mon.
Bonds : May track US treasury yields, crude oil prices Tue. Mild value buying may support prices: 10-yr bond yield 7.70-7.74% vs 7.74% Monday.
Rupee : To open steady-to-tad dn. To track US dollar, euro in overnight trade for cues. Range 62.30-62.70/$1 vs 62.55/$1 Mon.
Stocks: Seen consolidating with slight negative bias. Nifty range: 8670-8800, Mon-end: 8756.75, down 181 points.

RBI COUNTER
* DAILY LAF TENDERS: One set of 1-day reverse repo (at 7.00%) and 1-day repo (at 8.00%). Bids for repo tender may be submitted between 0930 IST and 1030 IST, and reverse repo between 1900 IST and 1930 IST.

* T-BILL AUCTION: RBI to hold auctions of 80 bln rupees of 91-day T-bills, and 50 bln rupees of 182-day T-bills.

MARKETS
Call : Seen opening firm around 8.50% as demand for funds is likely to remain strong from banks. One-day call: 8.50% vs 8.20-8.35% Tuesday.

Bonds : To take cues from oil prices, US treasuries. Mild profit sales may weigh. 10-year bond yield: 7.84-7.88% vs 7.87% Tuesday.

Rupee : Seen steady to tad down Wed. To track Asian units, NDF. To trade in thin band amid low volume. Range: 63.30-63.60/$1 vs 63.38/$1 Tuesday.

Stocks: Seen range bound amid lack of major triggers. Nifty range: 8230-8300, Tuesday-end: 8248.25, up 1.95 points.

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RBI COUNTER
* DAILY LAF TENDERS: One set of 1-day reverse repo (at 7.00%) and 1-day repo (at 8.00%). Bids for repo tender may be submitted between 0930 IST and 1030 IST, and reverse repo between 1900 IST and 1930 IST.

* TERM REPO TENDER: One set of 14-day variable rate term repo for 155 bln rupees. Bids may be submitted between 1100 and 1130 IST.

MARKETS
Call  : May open 20-30 bps above repo rate on demand from banks to meet funding needs. 1-day call: 8.20-8.30% vs 8.20-8.25% Monday.

Bonds : May take opening cues from oil prices, US treasury yields. Seen in narrow range intraday. 10-yr bond yield: 7.90-7.98% vs 7.93% Monday.

Rupee : Seen steady on lack of major cues. Month-end importer dollar buys to weigh. Asian units, NDF eyed. Range: 63.55-63.75/$1 vs 63.66/$1 Monday.

Stocks: Indices seen range bound; government reforms eyed Nifty range: 8200-8300, Monday-end 8246.30, up 45.60 points.

RBI’s REPO RATE ON DEMAND

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RBI COUNTER
* DAILY LAF TENDERS: One set of 1-day reverse repo (at 7.00%) and 1-day repo (at 8.00%). Bids for repo
tender may be submitted between 0930 IST and 1030 IST, and reverse repo between 1900 IST and 1930 IST.
MARKETS
Call  : Seen opening tad above RBI’s repo rate on demand from banks to meet reserve needs. 1-day call: 8.00-8.15% vs 7.35-7.60% 2-day Saturday.
Bonds : May take cues from crude oil price, US treasuries. 10-year bond yield: 7.94-8.00% vs 7.97% Friday.
Rupee : May open down as dollar firm vs euro. Sell orders by exporters may check sharp fall. Range: 63.45-63.70/$1 vs 63.57/$1 Friday.
Stocks: Seen consolidating; bias bearish; auto cos in focus; Nifty range: 8145 – 8250, Friday-end 8200.70, up 26.60 points.

RBI COUNTER & MARKETS NEWS

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RBI COUNTER
* DAILY LAF TENDERS: One set of 3-day reverse repo (at 7.00%) and 3-day repo (at 8.00%). Bids for repo tender may be submitted between 0930 IST and 1030 IST, and for reverse repo between 1900 IST and 1930 IST.
* TERM REPO: One set of 14-day variable rate term repo for 185 bln rupees. Bids may be submitted between 1100 and 1130 IST.
* GILT AUCTIONS: RBI to auction 20 bln rupees of 8.08%, 2022 bond, 60 bln rupees of 8.15%, 2026 bond, 30 bln rupees of 9.20%, 2030 bond, and 30 bln rupees of 8.30%, 2040 bond.

MARKETS
Call  : Seen opening 30-40 bps above RBI’s repo rate on demand from banks to meet reserve needs. 3-day call: 8.30-8.40% vs 7.95-8.00% 2-day Wed.
Bonds : Steady as participants likely to stay off big buys before auction. Value buying may support. 10-yr bond yield: 7.91-7.98% vs 7.96% Wed.
Rupee : Seen weak as dollar to remain firm against major units. Dollar sales to check fall. Range: 63.40-63.80/$1 vs 63.51/$1 Wed.
Stocks: Seen opening marginally up, but may remain in thin range. Nifty range: 8150-8280, Wednesday-end 8174.10, down 92.90 points.

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DATA ALERT
> US MBA MORTGAGE APPLICATIONS SURVEY for week ended Dec 19. 1730 IST
> US UNEMPLOYMENT INSURANCE CLAIMS REPORT for wk ended Dec 20. 1900 IST
> US DJ-BTMU BUSINESS BAROMETER for wk ended Dec 13. 2030 IST
> US EIA PETROLEUM STATUS REPORT for wk ended Dec 19. 2100 IST
> US EIA NATURAL GAS STORAGE REPORT for wk ended Dec 19. 2230 IST

RBI COUNTER
* DAILY LAF TENDERS: One set of 2-day reverse repo (at 7.00%) and 2-day repo (at 8.00%).Bids for repo tender may be submitted between 0930 IST and 1030 IST, and for reverse repobetween 1900 IST and 1930 IST.
* T-BILL AUCTION: RBI to hold auctions of 80 bln rupees of 91-day T-bills, and 50 bln rupees of 364-day T-bills.

MARKETS
Call  : Seen opening 20-30 bps above RBI’s repo rate on demand from banks to meet reserve needs. 2-day call: 8.20-8.30% vs 8.00% 1-day Tuesday.
Bonds : To take cues from oil prices, US treasuries. Players may stay off big bets before holiday Thu. 10-year bond yield: 7.91-7.96% vs 7.92% Tue.
Rupee : To open weak as dollar may strengthen on strong US GDP data. To track Asian units and NDF. Range: 63.2000-63.5500/$1 vs 63.2800/$1 Tue.
Stocks: To remain choppy amid rollovers due to F&O expiry. Nifty range: 8200-8350, Tuesday-end: 8267.00, down 57.00 points.

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