20 JAN
Knight Snippet

Transcript

Good Morning Treasurers,
This is your host Parthesh Shah, from of Knight Fintech and you are listening to Knight Snippets.
Here is what you need to know before going into trade for 20-Jan-2022.

International Market:
- US 10-year yields were on a roll, but finally retreated from intra-day high of 1.90%
- US 10-year now closed at 1.83%, and 30-year at 2.14% on Tuesday
- US 2-year is now at 1.06%, trading first time above 1.00% in last 2-years
- On a very notable journey, German 10-year bunds are now trading positive at 0.02% for the first time since May 2019
- Market strategists are now confident that gone are the days for negative yields for German 10-years

Crude Oil Market:
- Crude is trading at $87.63/bbl
- Crude Short Term Range: $84-88
- Crude has not breached $90/bbl mark for now, and that is a sign of relief

Currency Market:
- Dollar index (DXY) is at: 95.45
- DXY today's range: 95.30 - 95.56
- USDCNY or Chinese yuan is at 6.34
- USDINR with a low of 74.60, closed at 74.58
Support: 74.30
Resistance: 74.65
- As crude is off the high and did not cross $90 mark, there will be some relief in rupee weakness story
- But, structurally we are seeing rupee sliding for the next 6-months

Domestic Market:
- There was a feeling in the market expecting RBI buying in the secondary market
- It seems, it was a second successive day where RBI was intervening in the secondary market to cap yields
- There are also expectations in the market that Finance Minister may consider a capital gains tax waiver in the Union Budget for global debt investors.
- The move would set the stage for India's inclusion into global bond indices of Bloomberg-Barclays and JP Morgan

- 5.63 GS 2026 closed at 5.94% Vs 5.94%;
- 6.10 GS 2031 closed at 6.60% Vs 6.62%;
- 6.67 GS 2035 closed at 7.07% Vs 7.08%;

Trading strategy:
- SDL buy call in auction worked-out well
- Market to remain positive with a range-bound action

Strategic call:
- 5.74 GS 2026 at 6.06% is again attractive and had recommended a BUY near 98.65

Trading Range:
- 6.10 GS 2031 range: 6.60% - 6.65%
- Next support: 6.65%

That's it for today.

See you tomorrow with a new episode of Knight Snippets.

Macro Economic Events

Indicator Last Expected AsOn Next
PPI Input YoY DEC   [GB] 8.60 9.10 17/01/22 19/01/22
CPI YoY DEC   [GB] 4.20 5.10 17/01/22 19/01/22
Foreign Bond Buying NOV   [US] -43.5 66.4 17/01/22 19/01/22
PPI Output MoM DEC   [GB] 1.50 0.90 17/01/22 19/01/22
Core CPI YoY DEC   [GB] 3.40 4.00 17/01/22 19/01/22
CPI MoM DEC   [GB] 1.10 0.70 17/01/22 19/01/22
Current Account NOV   [ER] 18.7 18.1 17/01/22 19/01/22

Auctions

Knight Statistical Poll vs. Actual Results
Security Name Tenure Notified Amount Expected
Cut-Off
Recommended At Actual-Cut-Off Amount Accepted Auction Type Announcement date Auction Date Settlement Date Source
4.56% GS 2023 2 Y 2000 T.B.D T.B.D T.B.D T.B.D Yield 17/01/22 21/01/22 24/01/22
364 DTB 19/01/2023 364 D 11000 3.65% - 3.70% 19/01/22 13:46 4.4727% 11000 Yield 14/01/22 19/01/22 20/01/22
6.99% GS 2051 30 Y 7000 T.B.D T.B.D T.B.D T.B.D Yield 17/01/22 21/01/22 24/01/22
182 DTB 21/07/2022 182 D 10000 4.05% - 4.09% 19/01/22 13:44 4.1242% 10000 Yield 14/01/22 19/01/22 20/01/22
6.67% GS 2035 15 Y 9000 T.B.D T.B.D T.B.D T.B.D Yield 17/01/22 21/01/22 24/01/22
5.74% GS 2026 5 Y 6000 T.B.D T.B.D T.B.D T.B.D Yield 17/01/22 21/01/22 24/01/22
91 DTB 21/04/2022 91 D 5000 4.35% - 4.40% 19/01/22 13:45 3.6856% 5000 Yield 14/01/22 19/01/22 20/01/22

Credit Research: Exposures and Next IP Dates

Uttar Pradesh Power Corporation Ltd

Debenture

John Deere Financial India Pvt. Ltd.

Debenture