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Fixed Income

Market Watch on a Rough Fixed Income Day

Fixed Income Markets are hurting big time. Here’s a quick update at 12 noon.

  • Call money (overnight interbank) is at 9.25%
  • RBI repo was about 33,263 cr. This is below the limit of around 38,000 crores.
  • CBLO markets (interbank borrowing) are at 8.50%
  • CD market at 11% [+2%] (Certificates of Deposit = <1 year wholesale borrowing by banks). That’s for a five day CD. Further out towards 1 year, rates are 10%.
  • Government Securities trade at 8.38% (2023), yields are up 20 bps. (0.2%). The 2026 has gone to 8.57% (again, 20 bps up).
  • 5 year corporate bonds are trading at 10%, which is about 0.50% higher than yesterday.

And Bank Stocks are, to put it mildly, screwed. The Index is down 5% for the day, and Yes bank is the worst hit at -10%.

(Why? See this)

Here’s the bank stock performance since before the RBI liquidity squeeze (July 15).

Bank Stocks Change from July 15

And then, like they say in a ghazal, forward-forward see, happens what.

  • Gold Bug says:

    FIIs have royally screwed retirees and risk averse investors who have invested in debt funds. It also shows utter incompetence of Debt MF Managers.

    • Kaka says:

      Haha, FII or any investor responds to what the govt and RBI do with policy. Put the blame in the right place at least. And, by the way, many FIIs are managing retiree money and are risk averse. So….
      Deepak, the silence in the finance community is a bit deafening. In continuation of your last line, do you see how govt policy is going to shape up in the intermediate and long term?

  • Ashwin says:

    @GoldBug – Incompetence? I once asked a fund manager (debt guy) if he has a crystal ball, and he said NO. In this case, what should be my best way, shld i invest with that fund manager or not? :):)

    • Gold Bug says:

      Although Mutual Fund AMCs have access to wide bouquet of fixed income products as registered member of RBI trading portals etc., but due to their sheer size they are not able to maneuver a large ship. In these circumstance retail investors have to be more agile in getting in or out to protect their debt portfolio which are behaving like equities especially in Emerging Markets. Buy and Hold in Debt Funds seems to be out. Behave like FIIs. Local Fund Managers have no interest it seems except to rope in can holders.

  • Shiva says:

    Its 10:50PM and MFs are yet to release their NAVs for the day!! Some negotiations happening or busy licking/dressing their wounds??

  • vivek says:

    Question is how can retail benefit out of it?
    Are short term FD rates going to shoot up? Should invest in Liquid funds now? is there any chance of rate hike in July 30 policy? is it right time to enter into bank stocks as contra play?
    sorry for too many questions..thanks.