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 08-Apr-2021.
- The FOMC’s March meetings showed that participants were seeing signs of an economic rebound and a pickup in inflation but still believed they were a long way from altering their interest rate policy or asset purchasing program
- Following the FOMC minutes, US bond yields are consolidating
- US 10-year closed at 1.68% and 30-year closed at 2.32% on Wednesday
Crude Oil Market:
- Crude is trading at $62.72/bbl
- Crude short term range: $63-66
- Dollar index (DXY) is at: 92.43
- DXY today's range: 92.25 - 92.76
- USDCNY or Chinese yuan is at 6.55
- USDINR with a low of 73.52, closed at 74.47
- USDINR range: 74.20 - 74.50
- Here are the reasons for the drastic move:
#1: The Indian central bank announced a new bond-buying program called G-SAP, under which it will purchase Rs 1 lakh crore in government securities via the secondary market. Some see this as a QE-like move, which would be negative for the currency
#2: other factors as well such as unwinding of positions in the offshore non-deliverables forwards market, which is used by foreign investors to hedge currency risk
Let's look at RBI's MPC policy actions first today:
#1: Repo unchanged at 4.00% and Reverse Repo unchanged at 3.35%
#2: Policy Stance accommodative
#3: MPC kept its growth outlook for FY22 unchanged at 10.5% but warned of downside risks, particularly from the second wave of Covid-19 infections.
#4: CPI Projections were well below MPC's inflation targets, but acknowledges the supply-side pressure on inflation
Now, here is the interesting news for Bonds:
RBI announced the G-SAP which is Govt Securities Acquisition Program, which is more like QE in nature
- Here, RBI has announced G-SAP 1.0, where RBI will buy Rs. 1 Lakh Cr in Q1-FY22 and has promised to do more if needed
- Govr also stated that From Jan-March-21, liquidity was abundant and Rs. 4.9 Lakh Cr on avg were parked in Reverse Repo
- To address this liquidity, longer tenor variable rate reverse repo operations will be carried out. The timing and tenor of these will be dependent on liquidity conditions.
-Govr categorically reiterated, that this should not be seen as liquidity tightening.
In short, RBI showed a change of approach, there was an visible shift in the forward guidance from “time-dependent” to “state-dependent” for transitioning from accommodative to gradual calibrated normalization
5.15 GS 2025 closed at 5.60% Vs 5.57% the previous trading day;
5.85 GS 2030 closed at 6.08% Vs 6.12% the previous trading day;
Remember, we had given a scenario analysis yesterday whereby we had given a high probability on positive momentum with 6.08% on cards?
RBI made it possible, quantitative models saw it through before it came.
- Public sector banks sold heavily with net Rs. 2,769 Cr
- But, this was absorbed by private sector banks with Rs. 2,388 Cr
- Again, MF houses bought Rs. 1,070 Cr
Now, with this extra QE or G-SAP brings a lot of confusion, a lot of questions for the investors and there is no single solution.
Reach out to us for your HTM <> AFS shifting.
Again, Knight Research had deliberately taken a decision to hold back HTM <> AFS shifting and asked all the clients to wait, now it is time to make the change with this new G-SAP in place.
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.
|Import YoY MAR [CN]||1,670||1,986||09/04/21||13/04/21|
|Stock Investment by Foreigners [JP]||977.6||640.9||13/04/21||15/04/21|
|Interest Rate Decision [KR]||0.50||0.50||13/04/21||15/04/21|
|Exports FEB [US]||190,127||191,944||01/04/21||07/04/21|
|Inflation Rate YoY MAR [IN]||0.0000||0.0000||09/04/21||12/04/21|
|Manufacturing Production YoY FEB [IN]||-2.00||-3.20||09/04/21||12/04/21|
|Balance Of Trade MAR [CN]||653.9||378.7||09/04/21||13/04/21|
|Reverse Repo Rate [IN]||3.35||3.35||01/04/21||07/04/21|
|Employment Change MAR [ A]||88,671||70,706||13/04/21||15/04/21|
|Industrial Production YoY FEB [IN]||-1.60||-2.80||09/04/21||12/04/21|
|Consumer Credit Change FEB [US]||8.79||-1.37||01/04/21||08/04/21|
|RBI Intrest Rate Decision [IN]||4.00||4.00||01/04/21||07/04/21|
|Balance Of Trade FEB [GB]||-6,202||-1,630||09/04/21||13/04/21|
|Balance Of Trade FEB [US]||-66,969||-68,213||01/04/21||07/04/21|
|Current Account FEB [JP]||1,166||647||01/04/21||08/04/21|
|Jobless Claims 4 Week Average [US]||729.5||719.0||01/04/21||08/04/21|
|GDP MoM FEB [GB]||0.60||-2.90||09/04/21||13/04/21|
|Markit Services PMI MAR [IN]||55.3||54.6||01/04/21||07/04/21|
|Markit composite PMI MAR [IN]||57.3||56.0||01/04/21||07/04/21|
|Consumer Confidence MAR [JP]||29.6||33.8||01/04/21||08/04/21|
|Industrial Production YoY FEB [GB]||0.0000||-4.9000||09/04/21||13/04/21|
|Import YoY MAR [ID]||13,265||16,787||13/04/21||15/04/21|
|Manufacturing Production MoM FEB [GB]||0.50||-2.30||09/04/21||13/04/21|
|EXPORT YoY MAR [CN]||2,640||2,049||09/04/21||12/04/21|
|WPI Manufacturing YoY MAR [IN]||4.17||5.70||13/04/21||15/04/21|
|Industrial Production MoM FEB [GB]||0.20||-1.50||09/04/21||13/04/21|
|Unemployment Rate MAR [AU]||5.80||5.60||13/04/21||15/04/21|
|Initial Jobless Claims [US]||658.0||719.0||01/04/21||08/04/21|
|Stock Investment by Foreigners [JP]||-79.0||-852.4||01/04/21||08/04/21|
|WPI Food YoY MAR [IN]||4.17||5.70||13/04/21||15/04/21|
|Foreign Exchange Reserves [JP]||554.4||200.7||01/04/21||08/04/21|
|Manufacturing Production YoY FEB [GB]||-2.50||-5.20||09/04/21||13/04/21|
|Import FEB [US]||257,096||260,158||01/04/21||07/04/21|
|Foreign Bond Investment [JP]||375.1||1,714.4||13/04/21||15/04/21|
|WPI Inflation YoY MAR [IN]||4.17||5.70||13/04/21||15/04/21|
|Cash Reserve Ratio [IN]||3.00||3.00||01/04/21||07/04/21|
|FDI (YTD) YoY MAR [CN]||260.7||448.6||13/04/21||15/04/21|
|Knight Statistical Poll||vs. Actual Results|
|Security Name||Tenure||Notified Amount||Expected
|Recommended At||Actual-Cut-Off||Amount Accepted||Auction Type||Announcement date||Auction Date||Settlement Date||Source|
|91 DTB 07/07/2021||91 D||15000||3.40% - 3.45%||07/04/21 13:47||3.3505%||15000||Yield||01/04/21||07/04/21||08/04/21|
|6.82% MGSDL 2031||10 Y||200||-||15/04/21 19:28||6.82%||200||Yield||09/04/21||15/04/21||16/04/21|
|5.63% GS 2026||5 Y||110000||5.57% - 5.60%||09/04/21 16:20||563%||73||Yield||05/04/21||09/04/21||12/04/21|
|6.78% JKSDL 2033||12 Y||500||-||15/04/21 19:30||6.78%||500||Yield||09/04/21||15/04/21||16/04/21|
|91 DTB 12/07/2021||91 DTB||15000||3.34% - 3.37%||12/04/21 14:11||3.3496%||15000||Yield||08/04/21||12/04/21||15/04/21|
|6.78% JSDL 2031||10 Y||1000||6.73% - 6.75%||15/04/21 19:29||6.78%||1000||Yield||09/04/21||15/04/21||16/04/21|
|182 DTB 06/10/2021||182 D||15000||3.55% - 3.60%||07/04/21 13:47||3.5906%||15000||Yield||01/04/21||07/04/21||08/04/21|
|6.78% APSDL 2038||17 Y||1000||6.85% - 6.90%||08/04/21 16:18||6.78%||1000||Yield||06/04/21||08/04/21||09/04/21|
|5.94% RJSDL 2025||4 Y||1000||5.90% - 5.95%||08/04/21 16:19||5.94%||1000||Yield||06/04/21||08/04/21||09/04/21|
|364 DTB 11/04/2022||364 D||6000||3.72% - 3.76%||12/04/21 14:12||3.7600%||6000||Yield||08/04/21||12/04/21||15/04/21|
|364 DTB 06/04/2022||364 D||6000||3.80% - 3.85%||07/04/21 13:48||3.7393%||6000||Yield||01/04/21||07/04/21||08/04/21|
|6.75% RJSDL 2031||10 Y||1000||6.75% - 6.80%||08/04/21 16:10||6.75%||1000||Yield||06/04/21||08/04/21||09/04/21|
|6.78% APSDL 2039||18 Y||1000||6.85% - 6.90%||08/04/21 16:09||6.78%||1000||Yield||06/04/21||08/04/21||09/04/21|
|6.64% GS 2035||14 Y||10000||6.60% - 6.62%||09/04/21 16:22||6.64%||13879||Yield||05/04/21||09/04/21||12/04/21|
|6.67% GS 2050||30 Y||7000||6.75% - 6.80%||09/04/21 16:21||6.7895%||7953||Yield||05/04/21||09/04/21||12/04/21|
|182 DTB 11/10/2021||182 D||15000||3.58% - .60%||12/04/21 14:12||3.6085%||15000||Yield||08/04/21||12/04/21||15/04/21|
No upcoming coupon payments.