•Fixed Income
The New 10-Year Benchmark GOI 6.79 2034 traded between 6.77% – 6.83% during the week ending on 15th Nov 2024 (Closing yield: 6.8294%).
The Old 10-Year Benchmark GOI 7.10 2034 traded between 6.82% – 6.86% during the week ending on 15th Nov 2024 (Closing yield: 6.8645%), tracking movement involved around Currency, Crude Oil, US Treasury Yields and the Inflation data.
•Auction Highlights
RBI conducted the Auction for G-sec, SDL, and T-bills for the aggregated amount of INR 37,000 Crore, INR 5,400 crore and INR 19,000 Crore, respectively.
G-sec Cutoff:
7.04% GS 2029: 100.91/6.8026%
New GS 2039: 6.92%
7.09% GS 2054: 100.68/7.0339%
SDL Cutoff:
07 Years: GJ 7.05%
09 Years: GJ 7.08%, \u0009
13 Years: HR 7.12%
15 Years: HP 7.13%, TS 7.13%
Re-issue of 7.17% Jammu and Kashmir SDL 2029 issued on September 18, 2019 at 100.43/7.0604%
T-Bill Cutoff:
091 Days: INR 7000 Crore 98.4199/6.4395%
182 Days: INR 6000 Crore 96.8051/6.6188%
364 Days: INR 6000 Crore 93.8118/6.6145%\u0009
•Commodities:
1)Brent Crude Oil: $70.72-$74.13 (Per barrel) (Closing: $71.04)
2)Gold: INR 7,565-INR 7,876 24 Carat (1 Gram)
3)Silver: INR 89,500-INR 93,000 (1 KG)
•Currency:
1)USD/INR: 84.337-84.478 ($) (Closing: 84.424)
•US Treasury Yield:
1)US 2 Years Treasury: 4.24%-4.37% (Closing: 4.30%)
2)US 5 Years Treasury: 4.21%-4.38% (Closing: 4.31%)
3)US 10 Years Treasury: 4.31%-4.50% (Closing: 4.44%)
•Corporate Bond Highlights
1)AAA 3 Years Bond traded between 7.45%-7.50% this week.
2)AAA 5 Years Bond traded between 7.40%-7.45% this week.
3)AAA 10 Years Bond traded between 7.25%-7.30% this week.
•News Highlights
INDIA
1)India’s foreign exchange reserves experienced a decrease of $6.4 billion, settling at $675.65 billion by November 8th. The decline was primarily attributed to a drop in Foreign Currency Assets, while gold reserves saw an increase. Despite this dip, India maintains its position as the fourth largest holder of foreign exchange reserves globally.
2)India’s retail inflation accelerated to a 14-month high of 6.21 per cent on an annual basis in October, quickening from 5.49 per cent in the previous month and breaching the central bank’s tolerance ceiling, primarily driven by persisting high food prices. Food inflation, which makes up around half of the overall Consumer Price Index (CPI) basket, surged to 10.87 per cent in October, up from 9.24 percent in the previous month. Rural inflation also quickened to 6.68 per cent, compared to 5.87 per cent in September, while urban inflation rose to 5.62 per cent from 5.05 per cent the previous month
3)India’s industrial output rebounded in September, growing 3.1%, after contracting 0.1% in August – a 22-month low – driven by a favourable base effect and pre-festive season stocking that boosted manufacturing, official data released on Tuesday showed. For the quarter ending September, IIP growth was at a seven-quarter low of 2.6% due to high base effect and weather vagaries. The growth was 4% in the first half of the current financial year, down from 6.2% in the corresponding period last year.
4)India’s Wholesale Price Index (WPI)-based inflation increased in October to a four-month high of 2.36 per cent from 1.84 per cent in September, primarily on the back of a spike in the prices of food items, particularly vegetables. Inflation in wholesale food prices increased to 13.54 per cent during the month.
5)India’s merchandise exports in Oct rose by an impressive 17.3%, highest in over two years, to $39.2 billion, while the trade deficit widened to $27.1 billion. According to govt data released on Thursday, imports increased by 3.9% to $66.3 billion in Oct compared to $63.9 billion in the year-ago period. A key highlight is the performance of non-petroleum and non-gems exports, a crucial indicator of India’s manufacturing health. These exports jumped 27.7% to $31.36 billion in October. The trade deficit (gap between imports and exports) narrowed as compared to $30.4 billion recorded in Oct last year.
6)India’s outward FDI commitments rose to $3.24 billion in October 2024, compared to $2.55 billion in October 2023 but declined from $3.77 billion in September 2024, according to RBI data. Equity commitments stood at $655.84 million in October 2024, down from $993.35 million a year earlier and $817.64 million in the previous month. Debt commitments surged to $1.24 billion, significantly higher than $248.4 million in October 2023 and $1.16 billion in September 2024. Guarantees remained steady at $1.33 billion in October 2024, compared to $1.31 billion a year ago, but were lower than $1.79 billion in September 2024. Outbound FDI includes equity, loans, and guarantees.
7)India’s merchandise exports are likely to grow 1.85% year-on-year to $107.5 billion in the third quarter of FY25, led by sustained momentum in economic activity and improving demand prospects in trading partners supported by expected global monetary easing, India Exim Bank said on Tuesday. Non-oil exports are forecast to grow 7.39% a year to $91.7 billion, while non-oil and non-gems and jewellery exports are forecast to amount $82.7 billion, with 7.8% growth.
8)India’s net direct tax collection grew 15.4 per cent year on year to Rs 12.1 lakh crore during the period April 1-November 10. Direct taxes include corporate and personal tax. It grew over 21 per cent to Rs 15 lakh crore, up 21.20 per cent, on a gross basis during the period, a statement issued by the income tax department said. This includes net corporate tax of Rs 5.10 lakh crore and non-corporate taxes of Rs 6.62 lakh crore. Other taxes worth Rs 35,923 crore were mopped up.
9)India’s Securities Transaction Tax (STT) collection has surged to ₹36,000 crore between April and November 2024, nearing 97% of the current fiscal year’s budget estimate of ₹37,000 crore.
10)Foreigners have sold 82.1 billion rupees ($973 million) of Indian government bonds, which are part of the JPMorgan index, so far in November, according to clearing house data on Thursday. A rise in U.S. yields along with a stronger dollar have driven the selling, traders and analysts said.
11)To facilitate ease of onboarding of Foreign Portfolio Investors (FPIs) and reduce duplication, SEBI will allow FPI applicants to fill either a full Common Application Form (CAF) or an abridged version with pre-filled data from the depository system, effective three months from the circular date. Applicants must consent to use and verify the accuracy of the pre-filled data, with updates allowed as needed. This aims to streamline the process, especially for FPIs like sub-funds or schemes under Investment Managers, whose information is already in the CAF module.
12)RBI and SEBI have introduced a framework allowing Foreign Portfolio Investors (FPIs) to reclassify their investments as Foreign Direct Investments (FDI) once they exceed the 10% ownership threshold in an Indian company. This offers FPIs the choice to either divest or reclassify their holdings, with necessary approvals. The reclassified investments will remain FDI even if the ownership falls below 10%. This change is expected to encourage foreign investments, especially in startups and mid-cap firms, while introducing tax obligations and approval timelines
13)Indian corporates, including non-banking financial companies (NBFCs), filed proposals in September 2024 to raise $4.84 billion through External Commercial Borrowings (ECBs), according to RBI data. Of the total, $3.77 billion is planned via the automatic route, while $1.06 billion is sought through the approval route. This highlights the continued reliance on ECBs for funding amid evolving market conditions.
14)Motilal Oswal Financial Services (MOSL) reported that the total number of demat accounts in India reached 179 million as of October 2024. However, new account additions experienced a dip, with 3.5 million accounts added in October 2024 compared to the average monthly additions of 3.9 million year-to-date for FY25.
15)The monthly mutual fund SIP crossed the Rs 25,000 crore mark for the first time in October and stood at Rs 25,323 crore against Rs 24,509 crore in September. The mutual fund folios were at all-time highs of 21,65,02,804 in October. The retail mutual fund folios, which include equity, hybrid, and solution-oriented schemes, were also at an all-time high at 17,23,52,296 for October as compared to 16,81,61,366 for September.
16)Moody’s Ratings on Friday forecast a 7.2 per cent GDP growth for India in 2024, saying the Indian economy is in a sweet spot, but inflation risks may prompt the RBI to retain a relatively tight monetary policy this year. Moody’s said that despite the near-term uptick, retail inflation should moderate toward the Reserve Bank’s target in the coming months as food prices ease amid higher sowing and adequate food grain buffer stocks.
17)The Employees’ Provident Fund Organisation witnessed a 7.6% jump in number of contributing members in 2023-24 at 73.7million compared to 68.5 million in the preceding years while the number of contributing establishments went up by 6.6% to 0.76 million as against 0.71 million in 2022-23, shows the draft annual report of EPFO for 2023-24.
18)India’s bilateral trade with China stood at $10.7 billion during October, witnessing 0.46 per cent contraction amid a slowdown in the neighbouring country, commerce department data showed. The contraction was mainly driven by exports as outbound shipments to China contracted 9.5 per cent at $1.15 billion, even as India’s overall exports bounced back in October and saw a double-digit growth of 17 per cent.
19)State Bank of India (SBI) has increased its marginal cost of funds-based lending rate (MCLR) by 5 basis points in three tenors – three months, six months and one year. With effect from November 15, the MCLR for three months and six months will be 8.55 per cent (8.50 per cent earlier) and 8.90 per cent (8.85 per cent), respectively.
WORLD
1)In a monthly report on Tuesday, OPEC revised its global oil demand growth forecasts downward for 2024 and 2025, citing weaker demand in China, India, and other regions. The 2024 growth estimate was reduced to 1.82 million barrels per day (bpd) from 1.93 million bpd in October, marking the fourth consecutive downgrade. The 2025 forecast was cut to 1.54 million bpd from 1.64 million bpd.
2)In his recent speech, Federal Reserve Chair Jerome Powell stated that the U.S. economy does not indicate an immediate need to lower interest rates, reaffirming the Fed’s commitment to achieving a 2% inflation target. Powell highlighted strong economic performance, a solid labor market, and the gradual normalization of housing services inflation. The Fed projects core PCE inflation to rise to 2.8% in October from 2.7% in September. He emphasized a cautious approach to policy adjustments and reiterated the Fed’s apolitical stance, stating that decisions are not influenced by political considerations. Powell also noted the Fed’s preparation to use emergency tools in case of financial instability.
3)America’s national debt has surpassed $36 trillion for the first time in its history, the US Debt Clock – a website monitoring the nation’s finances in real time reported on Friday. The figure grew by nearly 6% from January to November, increasing by $1 trillion in less than four months. In late July, the US Treasury announced that it had surpassed $35 trillion.
4)The US consumer price index increased to 315.66 points in October, according to the Bureau of Labor Statistics, which increased from 315.30 points in September.
5)Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 217,000 for the week ended Nov. 9, the Labor Department said on Thursday. Economists polled by Reuters had forecast 223,000 claims for the latest week.
6)The annual inflation rate in the US accelerated to 2.6% in October 2024, up from 2.4% in September which was the lowest rate since February 2021, marking the first increase in inflation in seven months. On a monthly basis, CPI rose by 0.2%, consistent with the previous three months. The annual core consumer price inflation rate stood at a three-month high of 3.3%, unchanged from the previous month.
7)The US producer price index for final demand rose 0.2% in October after an upwardly revised 0.1% gain in September, the Labor Department’s Bureau of Labor Statistics said on Thursday. Economists polled by Reuters had forecast the PPI climbing 0.2% following a previously reported unchanged reading in September.
8)October retail sales grew from the prior month, reflecting continued resilience in the American consumer. Retail sales rose 0.4% in October. Economists had expected a 0.3% rise in spending, according to Bloomberg data. Meanwhile, retail sales in September were revised up to a 0.8% increase from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data. Auto sales drove a majority of the gains in October’s reading, with sales in the sector rising 1.6%.
9)The U.S. budget deficit jumped nearly four-fold to $257 billion in October, a figure inflated by one-off factors, the Treasury Department said on Wednesday in a report that started off a new fiscal year with a big hole to be turned over to President-elect Donald Trump in January. The Treasury said the October deficit was up 287% from the $67 billion deficit in October 2023, but calendar adjustments in benefit payments had cut that month’s deficit nearly in half.
10)In November, the ZEW Economic Sentiment Index for the eurozone declined from 20.1 points in October to 12.5, missing the market’s expected figure of 20.1. Similarly, views on the eurozone’s current situation fell, with the index decreasing by 3.0 points to -43.8.
11)In September 2024, the Eurozone’s industrial production decreased by 2.8% year-on-year (YoY), compared to the same month in 2023. This was more than the 2.0% drop that economist had predicted.
12)In the third quarter of 2024, seasonally adjusted GDP increased by 0.4%8 in the euro area and by 0.3% the EU, compared with the previous quarter, according to a flash estimate published by Eurostat, the statistical office of the European Union. The employment *increased by 1.0% in the euro area and by 0.8% in the EU in the third quarter of 2024, after +0.9% in both areas in the second quarter of 2024.
13)The United Kingdom’s (UK) ILO Unemployment Rate ticked up to 4.3% in the three months to September, following 4.0% in August, the data published by the Office for National Statistics (ONS) showed on Tuesday. The market expected a 4.1% reading in the reported period.
14)In September 2024, the UK’s trade deficit widened to £3.46 billion, up from £2.02 billion in August. Goods imports fell by £3.0 billion (6.3%), with declines in both EU and non-EU imports, while goods exports dropped by 5.8% to a 28-month low of £68.20 billion. Services imports rose slightly by £0.2 billion (0.8%), whereas services exports declined by £0.1 billion (0.3%), contributing to the overall trade imbalance.
15)UK gross domestic product (GDP) is estimated to have increased by 0.1% in Quarter 3 (July to Sept) 2024, following growth of 0.5% in Quarter 2 (Apr to June) 2024. GDP is estimated to have increased by 1.0% in Quarter 3 2024, compared with the same quarter a year ago.
16)Industrial Production in the UK Decreased by 0.5% (MoM) in September. Monthly production output was estimated to have decreased by 0.5% in September 2024; this follows a decrease of 0.7% in July 2024 and an increase of 0.5% in August 2024.
17)Manufacturing Production in the United Kingdom decreased 0.70 percent in September of 2024 over the same month in the previous year. Manufacturing Production in the United Kingdom averaged 1.86 percent from 1950 until 2024, reaching an all-time high of 35.50 percent in April of 2021 and a record low of -20.50 percent in April of 2020
18)The Bank of Japan said on Wednesday the preliminary Producer Price Index rose 3.4 percent from the same month last year. That compares to a 3.1 percent increase in September. The costs of goods traded between companies in Japan were up in October. This was due mainly to higher prices of rice and copper. Monthly, producer prices rose by 0.2%, beating consensus of a flat reading and following an upwardly revised 0.3% gain in September.
19)Japan’s economy expanded by an annualized 0.9% over the July-September quarter, government data showed on Friday, slowing from the previous three months due to tepid capital spending though an unexpected pickup in consumption added a bright spot.
20)Industrial Production in China increased 5.30 percent in October of 2024 over the same month in the previous year. Industrial Production in China averaged 11.04 percent from 1990 until 2024, reaching an all-time high of 35.10 percent in January of 2021 and a record low of -21.10 percent in January of 1990.
