Halister News

(Bloomberg) -- Current spread between India’s 10-yr govt bond yield and repo rate is about 55 bps, still close to past 5-yr avg of 50 bps, suggesting IGBs haven’t yet fully priced in monetary easing expectations, according to Standard Chartered.

• CPI inflation probably peaked, analysts including Nagaraj Kulkarni write in Sept. 8 note; they see increased likelihood of CPI inflation printing at below 5% during rest of 2H FY17; this poses risk to current call that RBI will keep status quo on rates, as such a drop in inflation may spur a 25 bps cut
• Standard Chartered stays positive on IGBs; revises target on its long 7-yr IGB trade recommendation to 6.60% from 7% and alters stop-loss order to 7.25% from 7.65%; this trade, initiated on July 7, has posted a USD total return of ~4.8%
• Expects RBI to conduct OMO purchases worth at least 800b rupees for rest of FY17
• Yield on 7.68% govt bond due Dec. 2023 down 2 bps at 7.01%