HALISTER1: India Rates ’Unattractive’, Long-End Yields to Rise, SocGen Says

India Rates ’Unattractive’, Long-End Yields to Rise, SocGen Says

(Bloomberg) -- India’s rates are likely to rise in 2017 on narrower spread between local govt bonds and U.S. Treasuries, and reduced foreign appetite for local currency bonds as policy easing is on its last legs, strategists including Frances Cheung write in note.
  • Short-end of curve may have some downside left on monetary easing, though market has priced in more than one RBI rate cut by end-2017
  • Investors should look for opportunity in steepeners and pay rates at long end of NDOIS and OIS curves
    • Trade will benefit from normalization of the yield curve amid higher Treasury yields and oil prices
  • Reduced foreign demand for local debt will add to negative sentiment; bond-OIS spread should widen this year
  • Forecasts 10-year yield at 6.3% by March, 6.7% by end-2017
  • Yield on 10-year govt bond currently up 3bps to 6.48%; fell 125bps in 2016
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Frances Cheung (Societe Generale SA)

To de-activate this alert, click here

UUID: 7947283