US producer prices rose less than expected in July, with a 0.1% increase reflecting the first decline in services costs this year. The Bureau of Labor Statistics reported this, while economists had forecast a 0.2% gain. Year-over-year, the PPI rose 2.2%. Excluding food and energy, the PPI was flat, marking the mildest increase in four months, with the core PPI up 2.4% from last year.
Top 3 Leads Today
- Deposit insurers must stay ready for fintech challenges, says RBI Patra
- MSCI adds 7 Indian cos to MSCI global standard indices in Aug rejig.
- IEA says slowdown in China oil demand to weigh on 2024, 2025 outlook.
Indian Markets
● Money Markets Minute: As bank demand eased, the call rate remained below the RBI's 6.25% standing deposit facility rate. The one-day call money rate was steady at 5.75%, unchanged from Monday, while the weighted average call rate rose slightly to 6.48% from 6.47%.
● Government Bond Brief: Government bond yields held steady as investors awaited key U.S. data. The 10-year benchmark 7.10% 2034 bond closed with a yield of 6.88%, flat from Monday. Turnover was ₹413.50 bln, against ₹237.55 bln the previous day.
● Corporate Bond Beat: Corporate bond yields held steady due to a lack of new domestic cues, with investors waiting for fresh primary market supply expected on Wednesday. Total deals amounted to ₹108.54 bln, up from ₹68.91 bln on Monday.
● Forex Flash: The rupee remained steady for the fifth straight day against the dollar, closing at 83.9700. Banks, possibly acting on behalf of the RBI, sold dollars, countering the downward pressure from oil companies' dollar purchases. The rupee traded within a narrow 3-paise range, compared to 83.9725 on Monday.
● Stocks Spotlight: Indian equity indices fell for the second day, with the Nifty slipping below 24,150. This came amid mixed economic data: CPI dropped to a near 5-year low in July, but IIP growth slowed to 4.2% in June. The Sensex closed 0.87% lower at 78,956.03, while the Nifty was down 0.85% at 24,139.
International Markets
- US Stocks: Optimism about potential rate cuts fuelled a rally on Wall Street, with the S&P 500 surging 1.7%, the Dow Jones Industrial Average rising 1%, and the Nasdaq Composite climbing 2.4%. Additionally, MSCI's global stock index advanced by 1.5%. This optimism was due to soft PPI data. The markets now await July inflation data, which is due today.
- Treasuries: Yields fell due to hopes of monetary easing due to soft PPI. The benchmark 10-year Treasury yield slipped to 3.8484%, while the two-year Treasury yield fell to 3.9398%.
- Currency: The dollar eased against the yen on Tuesday and weakened against a basket of major currencies during subdued trading as markets awaited U.S. inflation data that could shed light on the Federal Reserve's future interest rate decisions. The dollar index, which tracks the U.S. currency against six other currencies, slipped 0.49% to 102.58. Meanwhile, the euro gained 0.6% to $1.09968, and the British pound rose 0.8% to $1.28670.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sector | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| Non Banking Financial Company (NBFC) | 1697 | 1966 | 784 | 747 | 45 |
| Financial Institution | 5 | 545 | 1286 | 45 | |
| Housing Finance Company | 53 | 231 | 302 | 115 | |
| Investment Company | 10 | 150 | 150 | ||
| Private Sector Bank | 100 | 100 | 5 | 61 |
Secondary trade details for recently issued primary corporate bonds:
| Security name | Issue date | Trades Since Issue (Cr) | Avg_Yield(%) | LTY(%) |
|---|---|---|---|---|
| 7.37 IRFC 31JUL29 | 2024-07-31 | 2700 | 7.38 | 7.36 |
| 9.10 CHOLAINVFIN 27JUN31 | 2024-07-31 | 1796 | 9.10 | 9.09 |
| 7.98 BAJAJ FINANCE 31JUL29 | 2024-07-31 | 767 | 7.97 | 7.97 |
| 8.25 SBICARDS 08AUG34 | 2024-08-08 | 669 | 8.24 | 8.24 |
| 7.80 BOM 05AUG34 | 2024-08-05 | 306 | 7.78 | 7.81 |
| 7.39 IIFCL 01AUG39 | 2024-08-01 | 265 | 7.38 | 7.38 |
| 8.30 SMFG 30JUN27 | 2024-08-05 | 250 | 8.38 | 8.38 |
| 8.50 GODREJHSGFIN 30NOV27 | 2024-07-30 | 240 | 8.55 | 8.57 |
| 7.98 IIDL 05AUG34 | 2024-08-05 | 205 | 7.97 | 7.97 |
| 0% 360ONEPRIME 13MAR26 | 2024-08-08 | 164 | 9.00 | 9.00 |
| 8.28 PNB HFL 30DEC26 | 2024-08-07 | 100 | 8.31 | 8.31 |
| 7.99 RCFL 07AUG27 | 2024-08-07 | 100 | 7.99 | 7.99 |
| 9.90 TYGER CAPITAL PRIVATE LIMITED - CALL 29JUL2027 MAT | 2024-07-29 | 100 | 10.35 | 10.35 |
| 8.1841 TFSIN 29SEP27 | 2024-08-01 | 90 | 8.20 | 8.20 |
| 0% EQUINOX INDIA DEVELOPMENTS LIMITED 05SEP2025 | 2024-08-05 | 80 | 11.93 | 11.93 |
| 7.87 SUMMITDIGITELLTD 15DEC29 C 15MAR30 M | 2024-08-05 | 75 | 8.15 | 8.15 |
| 7.98 SUNDARAMHFL 04SEP26 | 2024-08-05 | 75 | 7.96 | 7.96 |
| 11.40 KEERTANA 28JAN27 | 2024-07-30 | 55 | 12.98 | 13.33 |
| 10.30 IKFFIN 30JUL27 | 2024-08-01 | 55 | 11.16 | 10.52 |
Source: Harmoney data analytics
Events This Week
August 14, Wednesday
US Real earnings for July.
US CPI for July.
India Passenger vehicles sales for July.
India WPI data for July.
August 15, Thursday
US Advance monthly sales for retail & food services for July.
US Unemployment insurance weekly claims Aug 10 week.
US Import & Export price indexes for July.
US Weekly export sales.
US Industrial production and capacity utilization for July.
India Independence Day.
India Balance of trade for July.
India Exports and imports for July.
August 16, Friday
US New residential construction for July.
US State employment and unemployment for July.
India FX reserves for Aug 9 week.
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