INDIA: Country Wrap: RBI Eases Corp Bond Rules
May-09 05:19
- The Reserve Bank of India has eased some restrictions for global investors buying local company bonds, aiming to lift foreign participation as investment quota usage is near the lowest level in at least a decade. Foreigners are no longer limited to having only 30% of their corporate bond holdings in debt maturing within a year, the RBI said in a circular late Thursday. Additionally, the authority scrapped the concentration limit for these investors. (source RBI)
- India's central bank is expected to pay a record dividend to the government, estimated to be around 3-3.5 trillion rupees, to offset shortfall in tax revenues due to slow growth. The dividend will bridge the gap in tax collections this year due to weak growth and lower disinvestment receipts amid market volatility, and create fiscal space of 0.1% to 0.2% of the gross domestic product. The windfall can be used to increase spending on social welfare, export promotion programs, and to meet any defense and internal security expenses if needed. (source BBG)
- The NIFTY 50 in India down again by -1.2%, having fallen -0.58% yesterday on concerns as to the conflict between India and Pakistan.
- The rupee is down by -0.14% today and down -1.5% for the week.
- Bonds have been strong given RBI buying this week, but have started Friday on the back foot with the IGB 10YR at 6.43% (+3.5bps)
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
Apr-09 05:18
| Date | Time | Country | Event |
| 09-Apr | 1330 | EU | ECB's Cipollone On Macro-Financial Stability Panel |
| 10-Apr | 900 | IT | Industrial Production |
| 11-Apr | 700 | DE | HICP (f) |
| 11-Apr | 800 | ES | HICP (f) |
| 11-Apr | 1045 | EU | ECB's Lagarde at Eurogroup Press Conference |
| 15-Apr | 745 | FR | HICP (f) |
| 15-Apr | 900 | EU | ECB Bank Lending Survey |
| 15-Apr | 1000 | EU | Industrial Production |
| 15-Apr | 1000 | DE | ZEW Current Expectations Index |
| 16-Apr | 900 | EU | EZ Current Account |
| 16-Apr | 900 | IT | HICP (f) |
| 16-Apr | 1000 | EU | HICP (f) |
| 17-Apr | 700 | DE | PPI |
| 17-Apr | 1315 | EU | ECB Deposit/ Main Refi/ Marginal Lending Rate |
| 17-Apr | 1345 | EU | ECB Monetary Policy press conference |
FOREX: Antipodean Wrap - AUD & NZD Bounce Off Asian Lows
Apr-09 05:17
The RBNZ cut interest rates as expected to 3.5%, citing downside risks for economic growth and inflation, and said it has further scope for reductions if needed. The Australian Treasurer will meet with top economic figures, following a similar meeting Tuesday with the heads of Australia's big banks and super funds. USD/CNH has seen a retracement from its highs around 7.4300 even though the Yuan fixing was higher for a 5th straight day. The market is looking for any confirmation that the PBOC is prepared to let the Yuan weaken.
- AUD/USD - Asian range 0.5915 - 0.6003, AUD has retraced off its Asian highs and goes into the London session trading around 0.5975. Can it hold below 0.6000 ?
- AUD/JPY - Asian range 86.05 - 87.46, AUD/JPY trading back near its lows as USD/JPY comes under pressure due to Asian stocks being heavily sold.
- NZDUSD - Asian range 0.5486 - 0.5561, NZD trading around 0.5539 back at levels it was pre the RBNZ cut. The price still fails to break 0.5500.
- AUD/NZD - Asian range 1.0750 - 1.0828, the cross could not hold onto attempts to get back on a 1.08 handle drifting lower after the RBNZ to go into the London session around 1.0775.
AUSSIE BONDS: Twist-Steepener Aligns With Global Bonds, RBA Gov Speech Tomorrow
Apr-09 05:12
ACGBs (YM +13.0 & XM -16.0) have twist-steepened, aligning with global markets.
- Cash US tsys are currently trading 1-15bps cheaper across benchmarks, with the curve steeper, extending yesterday's decline during the Asia-Pac session.
- The sell-off reflects growing concerns that China may retaliate against tariffs by offloading US assets, including US tsys.
- Alongside the steepening of the curve, interest-rate swaps have extended their recent extreme outperformance of US tsy securities as traders sought to avoid costs associated with holding bonds.
- Yesterday, Trump officials confirmed the 104% tariff on China went into effect at noon. Concurrently, China vowed to "fight to the end".
- On the US front, the focus turns to the March FOMC minute release at 1400ET today, CPI on Thursday and PPI on Friday morning.
- Cash ACGBs are 13bps richer to 18bps cheaper, with the 3/10 curve steeper and the AU-US 10-year yield differential at -2bps, 8bps tighter on the day.
- The bills strip has bull steepened with pricing +13 to +29.
- RBA-dated OIS pricing is 11-30bps softer across meetings today. A 50bp rate cut in May is given a 92% probability, with a cumulative 144bps of easing priced by year-end.
- Tomorrow’s local calendar will see Consumer Inflation Expectations data and a speech from RBA Governor Bullock.
