Good Morning Treasurers,
This is your host Parthesh Shah, Co-Founder of Knight Fintech and you are listening to Knight Snippets.
Here is all what you need to know before going into trade for 23-Feb-2021.
International Market:
- Fed chair Jerome Powell is set to address Congress on Tuesday and Wednesday
- We expect the US yields to cool-down a bit after this address
- US 10-year closed 3 bps higher at 1.37% and 30-year closed 5 bps higher at 2.19%
- Still there is no relief and the yield surge is getting a momentum
- Germany’s benchmark 10-year bond yield rose to a fresh 8-month high on Monday, as bets on stronger economic growth and inflation in the months ahead continued to put upward pressure
- Germany 10-year is now at -0.28%, which usually used to hover around -0.55% to -0.65%
Crude Oil Market:
- The leaders of the OPEC+ alliance, Saudi Arabia and Russia, are reportedly once again at odds over oil supply management ahead of another crucial meeting of the group next week on March 3-4
- OPEC’s top producer and de facto leader Saudi Arabia would likely prefer the March 3-4 meetings to decide that the OPEC+ coalition holds production flat, not easing the cuts in April
- On the other hand, Russia, will likely be pushing for further easing of the production cuts
- Remember Saudi Arabia had decided to cut their own oil production by 1 mbpd for March and April and let others increase their supply gradually to support the oil prices in the pandemic hit weaker global demand
- Saudi Arabia is expected to use that as "leverage for getting a deal" to make sure the production for April stays flat
- This extra self-declared 1mbpd oil production decrease from Saudi Arabia was one of the main reasons for recent months' Oil Price rally
- Crude is trading at $66.25/bbl
- Crude short term range: $64-67
- Our crude's $70/bbl is on-track
Currency Market:
- Dollar index (DXY) is at: 89.95
- It has finally broken the psychological 90.00 level and is trading below the key level
- DXY today's range: 89.20 - 90.35
- USDCNY or Chinese yuan is at 6.46
- USDINR with a low of 72.29, closed at 72.49 on Monday
- USDINR range: 72.35 - 72.65
Domestic Market:
- The MPC Policy minutes were released yesterday after market hours and all the members have the following opinions:
#1: Strong economic recovery is underway
#2: Food inflation has bottomed-out and will rise from Apr-June, but we will not have last year type of abnormal food inflation
#3: Accommodative stance has to continue for longer if needed to revive the investment and consumption cycles
#4: Members were also cognizant on the sticky nature of the core inflation (Core inflation is without food and fuel, which are more volatile)
5.15 GS 2025 closed at 5.76% Vs 5.70% the previous trading day; a straight 6bps increase in a single day
5.85 GS 2030 closed at 6.20% Vs 6.13% the previous trading day; a straight 7bps increase in a single day
- Few of the traders have now started taking some small trading positions on the hope that RBI's stronger intervention will come soon
- The broader range for 5.85 GS 2030 is 6.17 - 6.23; From a technical stand-point, 6.23% is a strong support for 5.85 GS 2030
- 5.15 GS 2025 @ 5.76 level is super attractive for us for another 10bps gain once the RBI cools-off the market, but we will wait to take a LONG position
Corporate Bonds:
In the primary market
SBI Cards and Payment Services Ltd raised Rs. 550 Cr maturing on Feb 23, 2024, at a coupon of 5.90%
Tata Power Co Ltd has raised Rs. 400 Cr for 3-years at a coupon of 6.18%. It has also raised Rs. 500 Cr maturing in five years at a coupon of 7.05%
- Trade volumes on the secondary markets were low due to yield rising fear
As you all know, we at Knight Research have been very clear in our communication to our clients to manage the duration risk.
Now, in this uncertain time, duration risk has become the most critical aspect to manage the risk of your treasury.
If you have concerns for your provisioning and need some help or need to shield your portfolio from upcoming wave of rising yields, you can reach out to us on 99 3030 7466 or research@knightfintech.com
That's it for today. You were listening to Knight Snippets with Parthesh Shah from Knight Fintech.
See you tomorrow with a new episode of Knight Snippets.
| Indicator | Last | Expected | AsOn | Next |
|---|---|---|---|---|
| Stock Investment by Foreigners [JP] | 330.1 | 463.2 | 22/02/21 | 26/02/21 |
| Bank Loan Growth YoY [IN] | 5.90 | 6.00 | 22/02/21 | 26/02/21 |
| Foreign Direct Investment JAN [BR] | 1,514 | 739 | 22/02/21 | 24/02/21 |
| Current Account [BR] | 202.0 | -5,400.0 | 22/02/21 | 24/02/21 |
| Jobless Claims 4 Week Average [US] | 833.3 | 836.8 | 22/02/21 | 25/02/21 |
| GDP Growth Rate YoY [IN] | -23.9 | -7.5 | 22/02/21 | 26/02/21 |
| Foreign Exchange Reserves [IN] | 583,700 | 6,075,400 | 22/02/21 | 26/02/21 |
| Industrial Production MoM JAN [SG] | 2.40 | 7.50 | 22/02/21 | 26/02/21 |
| GDP Growth Rate YoY [US] | 0.0000 | 4.0000 | 22/02/21 | 25/02/21 |
| Current Account JAN [BR] | 202.0 | 0.0 | 22/02/21 | 24/02/21 |
| Loan Prime Rate 1Y [CN] | 3.85 | 3.85 | 19/02/21 | 22/02/21 |
| Pending Home Sales YoY JAN [US] | 16.6 | 21.4 | 22/02/21 | 25/02/21 |
| Private Sector Credit YoY JAN [AU] | 0.30 | 0.10 | 22/02/21 | 26/02/21 |
| Consumer Confidence FEB [KR] | 95.4 | 89.9 | 19/02/21 | 23/02/21 |
| Retail Sales MoM JAN [JP] | -0.80 | -2.00 | 22/02/21 | 25/02/21 |
| Interest Rate Decision [KR] | 50.0 | 0.5 | 22/02/21 | 24/02/21 |
| Infrastructure Output YoY Jan [IN] | -1.40 | -1.30 | 22/02/21 | 26/02/21 |
| Housing Price Index YoY JAN [CN] | 4.00 | 3.80 | 19/02/21 | 23/02/21 |
| Inflation Rate YoY JAN [SG] | -10.00 | 0.00 | 19/02/21 | 23/02/21 |
| Retail Sales YoY JAN [JP] | 0.60 | -0.30 | 22/02/21 | 26/02/21 |
| Government Budget Value [IN] | -10,755 | -11,585 | 22/02/21 | 26/02/21 |
| Import Price YoY JAN [SG] | 91.8 | 93.3 | 22/02/21 | 26/02/21 |
| Inflation Rate MoM JAN [SG] | 0.40 | 0.40 | 19/02/21 | 23/02/21 |
| Foreign Bond Investment [JP] | 1,029 | 477 | 22/02/21 | 26/02/21 |
| Industrial Production YoY JAN [SG] | 18.7 | 14.3 | 22/02/21 | 26/02/21 |
| Industrial Production YoY JAN [JP] | -3.90 | -2.60 | 22/02/21 | 26/02/21 |
| Export Price YoY JAN [SG] | 90.4 | 89.7 | 22/02/21 | 26/02/21 |
| Business Confidence FEB [KR] | 85.0 | 82.0 | 22/02/21 | 24/02/21 |
| Private Capital Expenditure QoQ [AU] | -3.00 | 3.00 | 22/02/21 | 25/02/21 |
| Initial Jobless Claims [US] | 848.0 | 861.0 | 22/02/21 | 24/02/21 |
| Core Inflation Rate YoY JAN [SG] | -0.1000 | -0.3000 | 19/02/21 | 23/02/21 |
| Deposit Growth YoY [IN] | 11.4 | 11.1 | 22/02/21 | 26/02/21 |
| Loan Prime Rate 5 Y [CN] | 0.0000 | 0.0000 | 19/02/21 | 22/02/21 |
| Bank Lending MoM JAN [BR] | 2.10 | 1.60 | 22/02/21 | 24/02/21 |
| Private Sector Credit MoM [AU] | 0.1000 | 0.3000 | 22/02/21 | 26/02/21 |
