Global demand fears drove Brent crude prices to a 3-1/2-year low on Tuesday. Brent fell below $70 per barrel for the first time since December 2021 as OPEC predicted reduced demand. The Organization of the Petroleum Exporting Countries has raised its concern about world crude oil demand in 2024. The cartel altered its expectations again after months of stability, citing economic uncertainties around key players. On September 10, OPEC cut its 2024 global crude oil demand projection for the second month in a row in its September Oil Market Report. Initial 2024 projection was maintained by the group from July 2023. It lowered its August prediction from 2.25 million barrels per day to 2.11 million.
Top 3 Leads Today
- Fitch arm sees India household spending up 6% in 2024, 6.5% in 2025.
- Corporate bond issuances fall 22% in August as firms await Fed rate cut.
- Southern states ask fin panel for 60% tax devolution, new parameters.
Indian Markets
- Money Markets Minute: The call rate remained below the RBI's 6.50% repo rate due to low demand for funds, as surplus liquidity stayed comfortable despite narrowing. The call money market rate for one-day loans settled at 6.40%, unchanged from Monday. The weighted average call rate stood at 6.50%, down from 6.52% on Monday.
- Government Bond Brief: Government bond yields ended steady ahead of the US CPI inflation data due after market hours on Wednesday, which traders said could provide a fresh view on the likely interest rate cut at the Federal Open Market Committee policy decision on Sep 18. The 10-year benchmark 7.10%, 2034 bond closed at 6.85% yield, against 6.85% on Monday.
- Corporate Bond Beat: Corporate bond yields remained largely steady in the secondary market as investors avoided significant moves due to a lack of fresh triggers. Transactions totalled ₹79.41 billion, down from ₹88.50 billion on Monday.
- Forex Flash: The rupee ended mostly unchanged against the dollar as RBI intervention offset pressure from a stronger dollar index. After fluctuating within a 4-paise range, the rupee settled at 83.9750 per dollar, close to its record low of 83.9900. It had closed at 83.9550 on Monday.
- Stocks Spotlight: Sharp gains in select pharmaceutical and IT stocks lifted benchmark indices, pushing the Nifty 50 above 25,000 after two sessions. Despite early gains from positive global cues, a sell-off in insurance companies and banks briefly pulled the market down. The Nifty 50 and BSE Sensex both ended 0.4% higher at 25,041.10 and 81,921.29 points, respectively.
International Markets
- US Stocks: The S&P 500 and Nasdaq rose on Tuesday amid fears about softening global demand ahead of inflation data. Market participants expect Inflation to rise closer to the Federal Reserve's 2% objective in Wednesday's CPI data, supporting Fed Chair Jerome Powell's opinion that price increase is under control and that the job market is slack enough to lower rates. The Dow rose 0.23% to 40,736.96; the S&P 500 rose 0.45% to 5,495.52; and the Nasdaq Composite jumped 0.84% to 17,025.88.
- Treasuries: Yields fell on Tuesday ahead of the US Presidential debate and inflation data anticipated on Wednesday. Investors would look for more hints on the severity of the Federal Reserve's interest rate drops next week, and they have already priced in a 25-basis point rate cut. The benchmark 10-year note yield ended at 3.6479%, down from 3.699% on Monday. The 30-year bond yield dropped to 3.9648% from 3.999% on Monday.
- Currency: The dollar fell against major currencies on Tuesday, consolidating Monday's gains ahead of significant inflation data and a highly anticipated US presidential debate. It is widely anticipated that the Federal Reserve will reduce interest rates for the first time in over four years next week. The yen rose 0.60% against the dollar to 142.33 per dollar, while sterling was last trading at $1.3085, up 0.10% for the day.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 391 | 1249 | 81 | 108 | 122 |
| Financial Institution | 225 | 375 | 563 | 550 | - |
| Housing Finance Company | 460 | 703 | 336 | 162 | 25 |
| Private Sector Bank | 595 | 30 | - | 537 | - |
| REITs | - | - | 260 | - | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 8.27 CANARA BANK PERP 29AUG29 C | 2024-08-29 | 1779 | 8.27 | 8.24 |
| 7.22 HPCL 28AUG29 | 2024-08-28 | 1074 | 7.22 | 7.22 |
| 7.37 IIFCL 02SEP34 | 2024-09-02 | 525 | 7.36 | 7.38 |
| 7.61 LICHSGFIN 29AUG34 | 2024-08-29 | 525 | 7.61 | 7.60 |
| 7.30 BOB 27AUG34 | 2024-08-27 | 450 | 7.30 | 7.30 |
| 7.45 AXISBANK 05SEP34 | 2024-09-05 | 440 | 7.44 | 7.45 |
| 8.55 CENTURYTEX 30AUG29 | 2024-08-30 | 350 | 8.57 | 8.58 |
| 7.72 THDC 02SEP34 | 2024-09-03 | 345 | 7.72 | 7.72 |
| 7.74 LICHSGFIN 11FEB28 | 2024-08-29 | 285 | 7.76 | 7.76 |
| 7.42 SBI 29AUG34 C 29AUG39 M | 2024-08-29 | 270 | 7.41 | 7.42 |
| 8.35 CENTURYTEX 30AUG27 | 2024-08-30 | 250 | 8.35 | 8.35 |
| 8.70 ADANI ENERGY SOLUTIONS LTD 28AUG2034 | 2024-08-27 | 240 | 8.50 | 8.50 |
| 9.50 AFL 23AUG34 | 2024-08-27 | 160 | 9.32 | 9.49 |
| 8.43 JSW STEEL LIMITED - CALL 29AUG2031 M | 2024-08-29 | 150 | 8.43 | 8.43 |
| 8.35 JSW STEEL LIMITED - CALL 29AUG2029 M | 2024-08-29 | 150 | 8.34 | 8.34 |
| 7.9918 L&T FINANCE 25MAR27 | 2024-09-05 | 125 | 8.02 | 8.02 |
| 7.25 IRFC 29AUG34 | 2024-08-29 | 115 | 7.25 | 7.25 |
| 9.25 MOFSL 03SEP32 | 2024-09-03 | 109 | 9.23 | 9.24 |
| 0% 360ONEPORTFOLIO 26FEB27 | 2024-08-26 | 72 | 9.40 | 9.40 |
| 8.0490 ADITYA BIRLA HFL 03DEC27 | 2024-09-05 | 70 | 8.04 | 8.07 |
| 9.03 CREDILA 04MAR26 | 2024-09-04 | 60 | 9.12 | 9.10 |
| 10.75 MIDLANDMICROFIN 27AUG26 | 2024-08-27 | 57 | 12.02 | 12.73 |
| 8.8871 HEROFINCORP 06OCT26 | 2024-09-06 | 57 | 8.91 | 8.90 |
| 8.40 GODREJHSGFIN 05JAN28 | 2024-09-05 | 50 | 8.42 | 8.42 |
Source: Harmoney data analytics
Events This Week
September 11, Wednesday:
- US Real Earnings for August.
- US CPI for August.
September 12, Thursday:
- US Unemployment Insurance Weekly Claims Report for Sep 7 week.
- US PPI for August.
- US Weekly Export Sales.
- India Industrial Production for July.
- India Inflation Rate for August.
- India Manufacturing Production for July.
- India Passenger Vehicles Sales for August.
September 13, Friday:
- US Import & Export Price Indexes for August.
- India Foreign Exchange Reserves for Sep 6 week.
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