INDIA: India update Swaps Pricing Vs. Pre-RBI April Meeting Levels
- India bonds saw a strong rally at the start of the week as the RBI announced their intentions for open market operations in May, indicating the purchase of US$12.5bn of bonds.
- The management of liquidity in the India market is evolving rapidly under the new administration, with liquidity seemingly the key focus.
- India’s central bank will buy 1.25t rupees of bonds via OMOs in May, it said in a statement.
- RBI to buy 500b rupees of bonds on May 6
- RBI to buy 250b rupees of bonds each on May 9, May 15 and May 19
- RBI to continue to monitor evolving liquidity and market conditions
- Bonds across the curve were -5bps lower on Tuesday following Monday’s release.
- From yesterday’s close, the swaps curve has a full rate cut priced in now by July but just 4bps priced in over next 12 months
The probability of a 25bps cut over the next month is 56% whereas at this point leading into the last RBI meet when they cut, the market had priced a 37% probability.
The government bond curve has 59bps of cuts priced in over the next 12 months up from 52bps on Monday
The RBI meets next on June 06.
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