•Fixed Income
The New 10-Year Benchmark GOI 6.79 2034 traded between 6.71% – 6.77% during the week ending on 18th Oct 2024.
The Old 10-Year Benchmark GOI 7.10 2034 traded between 6.75% – 6.82% during the week ending on 18th Oct 2024, tracking movement involved around Crude Oil, US Treasury Yields and Inflation data.
•Auction Highlights
RBI conducted the Auction for G-sec, SDL, and T-bills for the aggregated amount of INR 33,000 Crore, INR 13,050 and INR 19,000 Crore, respectively.
G-sec Cutoff:
7.02% GS 2031: 101.33/6.7662%\u0009\u0009\u0009\u0009
7.23% GS 2039: 103.37/6.8590%
7.09% GS 2054: 101.35/6.9806%\u0009\u0009\u0009
SDL Cutoff:
03 Years: GJ 6.82%
08 Years: UP 7.08%\u0009
10 Years: HP 7.08%, KR 7.08%, PD 7.09%
11 Years: KR 7.09%, RJ 7.09%
20 Years: PN 7.11%
21 Years: TS 7.11%
Re-issue of 7.25% Puducherry SDL 2032 issued on January 25, 2017 at 101.00/7.0690\u0009
Re-issue of 7.65% Rajasthan SGS 2033 issued on January 25, 2023 at 103.44/7.0907
T-Bill Cutoff:
091 Days: INR 7000 Crore 98.4170/6.4515%
182 Days: INR 6000 Crore 96.8376/6.5493%
364 Days: INR 6000 Crore 93.8739/6.5438%\u0009
•Commodities:
1)Brent Crude Oil: $72.50-$78.55 (Per barrel)
2)Gold: INR 7,740-INR 7,811 24 Carat (1 Gram)
3)Silver: INR 96,000-INR 99,000 (1 KG)
•US Treasury Yield:
1)US 2 Years Treasury: 3.91%-4.01%
2)US 5 Years Treasury: 3.82%-3.91%
3)US 10 Years Treasury: 3.99%-4.1%
•Corporate Bond Highlights
1)AAA 3 Years Bond traded between 7.40%-7.45% this week.
2)AAA 5 Years Bond traded between 7.35%-7.40% this week.
3)AAA 10 Years Bond traded between 7.25%-7.30% this week
•News Highlights
INDIA
1)India’s retail inflation rose to 5.49% in September, driven by higher vegetable prices and a lower year-ago base, surpassing the Reserve Bank of India’s (RBI) 4% medium-term target for the first time since July. This increase follows a five-year low of 3.65% in August.
2)The food inflation, which accounts for around half of the overall CPI basket, jumped to 9.24 per cent in September from 5.66 per cent in the previous month, the data showed. The inflation rate for vegetables grew 35.99 per cent in August as against 10.71 per cent in the previous month, while pulses & products inflation eased to 9.81 per cent as against 13.6 per cent in August.
3)Rural inflation quickened to 5.87 per cent as against 4.16 per cent in August, whereas urban inflation accelerated to 5.05 per cent as compared to 3.14 per cent in the previous month.
4)India’s wholesale inflation rose to 1.84% in September from 1.31% in August, driven by changes in the Wholesale Price Index covering primary articles, fuel, and manufactured products. The RBI’s MPC retained the repo rate and adjusted inflation projections, maintaining a neutral stance amidst varied inflation and growth trends.
5)India’s forex reserves contracted by $10.7 billion to $690 billion as of October 11, with foreign currency assets reducing by $10.5 billion to $602 billion. Gold reserves and SDRs also saw a dip, while the RBI continues managing market volatility to prevent steep rupee depreciation.
6)India’s merchandise trade deficit narrowed to a five-month low of $20.78 billion in September as imports grew at the slowest pace in six months and exports rose marginally after two months of decline, the official data showed. The trade deficit, or the gap between imports and exports, had widened to a 10-month high of $29.65 billion in August. Goods worth $55.36 billion were imported last month, up 1.62 per cent compared to the year-ago period, amid softening global petroleum prices. In September, exports rose by 0.5 per cent to $34.58 billion due to muted global demand amid geopolitical challenges, according to the data.
7)According to Primedatabase, in H1FY25, funds raised by NBFCs from debt capital markets totaled to Rs 3.23 trillion, up 3.11 per cent year-on-year (Y-o-Y) during the same period last year. In 2024 so far (upto September), this number adds up to Rs 5.09 trillion, up almost 4 per cent Y-o-Y.
8)India’s GDP is expected to grow at 6.95% in the current financial year, which is about 25 basis points (bps) lower than the Reserve Bank of India’s (RBI) forecast, according to a note by the Centre for Monitoring Indian Economy (CMIE).
9)At the India Credit Forum hosted by Bloomberg, RBI Governor Shaktikanta Das addressed key economic concerns, stating that inflation in October is expected to remain sticky but may ease in November and December, although upside risks persist. He emphasized that the RBI is not behind the curve on policy rates and the upcoming December decision will hinge on the inflation outlook rather than external factors like U.S. elections. Das clarified that the RBI doesn’t manage exchange rates but responds to market demand and supply, countering market assumptions. Regarding growth, he highlighted that India, as a large economy, must rely on multiple growth levers, not solely manufacturing or services. He also noted the need for more institutional investors, especially Foreign Institutional Investors (FIIs), in India’s bond markets, where only 15% of the allocated space is currently utilized. However, FIIs’ biggest hurdle remains the complex KYC process and UBO declarations, which are constrained by FATF regulations.
10)The mutual fund industry AUM hit an all-time high of Rs 67.90 lakh crore in September, led by net inflows across open-ended categories and mark-to-market (MTM) gains in the equity market. The industry’s AUM increased from Rs 66.70 lakh crore in August, reflecting growth of Rs 0.39 lakh crore or 0.58% over the previous month, according to a monthly note by the Association of Mutual Funds in India (AMFI).
WORLD
1)OPEC said in its monthly report that the world oil demand will rise by 1.93 million barrels per day (bpd) in 2024 -106,000 barrels per day less previously estimated, or the growth of 2.03 million bpd it expected last month.
2)As of October 17, 2024, the US initial jobless claims were 241,000, which is a 7.31% decrease from the previous week and a 14.22% increase from one year ago.
3)The price index for US exports fell 2.1% year-on-year in September, the largest 12-month decrease since January 2024. This was due to lower prices for nonagricultural exports, which more than offset higher agricultural export prices. The price index for US imports fell 0.1% year-on-year in September. This was due to cheaper energy products.
4)Retail Sales in the United States increased 1.7% year-on-year in September 2024, the smallest yearly gain since January, following an upwardly revised 2.2% rise in August. Retail Sales YoY in the United States averaged 4.74 percent from 1993 until 2024, reaching an all-time high of 52.50 percent in April of 2021 and a record low of -19.90 percent in April of 2020.
5)Industrial Production in the United States decreased 0.6% year-on-year in September 2024, the biggest decline in five months, following a downwardly revised 0.2% fall in August. Mining sank 2.2% and manufacturing contracted 0.5% while production of utilities increased 0.6%.
6)The United States saw a 0.5% year-on-year decline in manufacturing production in September 2024, following a downwardly revised flat reading in August. Over the long term, U.S. manufacturing production has averaged 3.56% from 1920 to 2024, with an all-time high of 67.90% in July 1933 and a record low of -39.40% in February 1946.
7)The United Kingdom’s (UK) ILO Unemployment Rate eased to 4.0% in the three months to August, following July’s 4.1% reading, the data published by the Office for National Statistics (ONS) showed. Additional details of the report showed that the number of people claiming jobless benefits increased by 27.9K in September, compared with a gain of 23.7K in August, missing the expected 20.2K print.
8)The annual inflation rate in the UK fell to 1.7% in September 2024, the lowest reading since April 2021 and driven down by lower airfare and petrol prices, compared to 2.2% in each of the previous two months and forecasts of 1.9%. Meanwhile the core inflation rate fell to 3.2% from 3.6% in the previous months.
9)In the UK, producer input prices fell by 2.3% in September 2024, further declining from a revised decrease of 1.0% in August, while producer output (factory gate) prices dropped by 0.7%, down from a revised increase of 0.3% in the previous month. On a monthly basis, input prices decreased by 1.0%, and output prices fell by 0.5% in September 2024. In contrast, UK services producer prices rose by 3.3% in the year to Quarter 3 (July to September) 2024, slightly up from a revised increase of 3.2% in Quarter 2 (April to June).
10)The Retail Price Index in the United Kingdom advanced by 2.7% year-on-year in September 2024, easing from a 3.5% rise in the previous month and below market expectations of a 3.1% gain. On a monthly basis, the RPI fell by 0.3%, reversing from a 0.6% increase in the prior period and compared to market forecasts of a 0.1% rise.
11)The Governing Council decided to lower the three key ECB interest rates by 25 basis points. Accordingly, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 3.25%, 3.40% and 3.65% respectively, with effect from 23 October 2024.
12)The euro area annual inflation rate was 1.7% in September 2024, down from 2.2% in August. A year earlier, the rate was 4.3%. European Union annual inflation was 2.1% in September 2024, down from 2.4% in August. The core inflation rate in the Eurozone was 2.7% in September 2024, down from 2.8% in August 2024.
13)The Euro Area recorded a trade surplus of 4583.60 EUR Million in August of 2024. Balance of Trade in Euro Area averaged 5584.95 EUR Million from 1999 until 2024, reaching an all-time high of 29946.10 EUR Million in July of 2015 and a record low of -55033.30 EUR Million in August of 2022.
14)Japan’s trade balance shifted to a deficit of JPY 294.24 billion in September 2024 from a surplus of JPY 60.56 billion in the same month a year earlier. It was the third straight month of a trade gap, coming in worse than market forecast of a shortfall of JPY 237.6 billion, with exports unexpectedly shrinking while imports grew. Sales declined by 1.7% to JPY 9,038.20 billion, marking the first drop since November 2023 and missing consensus of a 0.5% rise. Meantime, imports rose 2.1% to JPY 9,332.55 billion, pointing to the sixth straight month of expansion but falling short of estimates of 3.2%.
15)Japanese inflation slowed in September with prices up 2.4 percent on-year, not including volatile fresh food, official data showed Friday. The core Consumer Price Index eased from 2.8 percent to 2.4% percent in August as the pace of increase in electricity and gas prices relented, the internal affairs ministry said.
16)China’s debt-to-GDP ratio hit a jaw-dropping 366% in Q1 2024, a new all-time high. Since the 2008 Financial Crisis, the ratio has doubled. To put this differently, for 1 unit of GDP, the Chinese economy has produced 3.66 units of debt burden.
17)China recorded a trade surplus of 81.71 USD Billion in September of 2024. Balance of Trade in China averaged 16.08 USD Billion from 1981 until 2024, reaching an all-time high of 125.16 USD Billion in February of 2024 and a record low of -61.99 USD Billion in February of 2020.
18)The Chinese economy expanded 4.6% yoy in Q3 of 2024, compared with market forecasts of 4.5% and a 4.7% rise in Q2. It marked the slowest annual growth rate since Q1 2023, amid persistent property weakness, shaky domestic demand, deflation risks, and trade frictions with the West.
19)China’s retail sales climbed by 3.2% year-on-year in September 2024 from 2.1% gain in the previous month, easily beating market estimates of 2.5% rise.
20)In September 2024, China’s industrial production increased by 5.4% year-on-year, which was higher than the 4.6% market forecast and the 4.5% increase in August. This was the fastest expansion in industrial output since May and the first acceleration in five months.
21)China’s surveyed unemployment rate fell to 5.1% in September 2024, compared to market estimates and August’s reading of 5.3%. This marks the lowest reading in three months. The jobless rate for locally registered residents decreased by 0.2 percentage points to 5.2%, at which non-local registrants had a rate of 4.8%, while the rate for non-local agricultural registrants stood at 4.6%. In 31 major cities, the urban unemployment rate was also 5.1%.
22)The Philippine central bank reduced its key interest rate by 25 basis points on Wednesday for a second meeting and left the door open to further cuts with medium-term inflation expected to stay within its 2%-4% target range.
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