Weekly Macro Data Coverage January 14, 2019

Key Highlights:

·With a 100 billion infusion through OMO, the liquidity condition in the banking system has improved significantly.

·The Repo-WACR differential has now increased to 15 bps in first week of January, 2019, which was negative in the last week of December.

·10-year US sovereign yield stands 2.69%, which is just 20 bps higher during the said period as compared to the previous year. However, in the past one year, Fed rate has increased by almost 100 bps.

·AAA Corporate bond yield reached 8.57% in first week of January as the secondary market is witnessing weaker demand.

Liquidity

With a Rs. 100 billion infusion through OMO, the liquidity condition in the banking system has improved. The Repo-WACR differential has increased to 15 bps in first week of January, 2019, which was negative in the last week of December. The credit deposit ratio as a result - still remains high at 78.6%, which is putting pressure on the lending side. On the international front, 3 months USD LIBOR rate stands at 110 bps higher, compared to a year earlier. This also gives a sense of tightening liquidity conditions in the global financial market.

Capital Market:

In the global capital market, 10-year US sovereign bond yield stands 2.69%, which is just 20 bps higher in the said period as compared to the previous year. However, in the past one year, Fed rate (money market rate) has increased by almost 100 bps. During this time, there is a higher demand for long term American financial instruments that is supressing their long term yields. It is therefore understood that currently financial factors are weighing in on economic factors in the capital market. As a result, yield curve are flattening.

From the domestic market perspective, the 10-year G-Sec yield increased by 4 bps in a week to 7.45%. AAA rated corporate bond yield, on the other hand, increased by 9 bps in a week to 8.57%. Over the last six months, corporate bond market is witnessing weak demand.

Currency Trend:

Over recent weeks, currencies of emerging economies seem to be less volatile. This is because of lower mobility in capital, both in debt as well as equity market. Market is therefore understood to be in a wait and watch mode as positive developments in US-China trade agreement are foreseen.

 

 

 

Interest rates and ratio

Interest Rate

Jan.05, 2018

Dec.07, 2018

Dec.14, 2018

Dec.21, 2018

Dec.28, 2018

Jan.04, 2019

Policy Repo Rate

6.00

6.5

6.5

6.5

6.50

6.50

Call Money Rate (WA)

5.87

6.36

6.44

6.49

6.57

6.35

364-Day Treasury Bill Yield

6.49

7.15

7.04

6.97

6.42

6.91

2-Yr Indian G-Sec

6.74

7.18

7.05

7.04

7.08

6.99

10-Yr Indian G-Sec

7.08

7.41

7.41

7.26

7.41

7.45

10-Yr US G-Sec

2.47

2.89

2.78

2.71

2.64

2.69

Spread in bps (10Yr Indian-10Yr US)

461

452

463

455

477

476

AAA Indian Corporate

7.93

8.63

8.63

8.65

8.48

8.57

AA Indian Corporate

8.51

--

-

-

9.35

8.93

Spread AAA to10 YR Indian bond

119

122

85

139

107

112

Credit/Deposit Ratio

74.64

77.44

-

78.59

-

-

USD LIBOR

1.70

2.80

2.82

2.82

2.79

2.80

Source: RBI, Investing.com

Deposit (In Rs. Lakh cr)

Bank Credit (In Rs. Lakh cr)

As on Dec 21, 2018

118.18

92.88

As on Dec 07, 2018

118.85

92.06

As on Dec 21, 2018

108.21

80.68

YTD (% change)

-0.56%

0.89%

YoY (% change)

9.22%

15.11%

Source: RBI

Commercial Paper (Fortnight):

Outstanding (In Rs. Lakh cr)

Amount issued (In Rs. Lakh cr)

31-Dec-18

4.99

0.96

30-Nov-18

5.61

1.30

31-Dec-17

4.09

0.92

% Change (MoM)

-11.04%

-26.36%

% Change (YoY)

21.92%

4.56%

Source: RBI

Indices

11-Jan-18

21-Dec-18

28-Dec-18

04-Jan-2019

11-Jan-19

NSE Index

10,530.70

10754

10,859.90

10,727.35

10,794.95

NSE Index Return

2.97

-1.81

0.74

0.52

-0.25

BSE Index

34,056.83

35742.07

36,076.7

35,695.10

36,009.84

BSE Index Return

2.74

-1.89

0.94

0.51

-0.27

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