On Wednesday, the Labor Department reported that US employers added fewer jobs than initially reported in the year through March, highlighting concerns about the labour market's health. The revised estimate for total payroll employment from April 2023 to March 2024 was 818,000, much lower than expected. The Federal Reserve's policy minutes revealed that some policymakers were willing to reduce borrowing costs at July’s policy meet. This spurred hopes among investors that the US central bank will start an aggressive rate cut cycle at its policy meeting from September.
Top 3 Leads Today
- Transmission of policy rate has been greater on deposits, shows RBI data.
- SEBI's rights issue revamp may require tightrope walk.
- Gold prices hover near record high post US Fed minutes.
Indian Markets
- Money Markets Minute: The interbank call money rate closed slightly below the RBI’s standing deposit facility rate of 6.25%, as demand for funds eased towards the end of the day. The one-day call money rate ended at 6.24%, down from 6.40% on Tuesday, with the weighted average rate at 6.53%, slightly up from 6.50%.
- Government Bond Brief: Yields ended down ahead of key labour data in the US, as well as the Federal Open Market Committee's meeting's minutes. The market was keen to consolidate after two days of gains without significant fundamental triggers. The 10-year benchmark 7.10%, 2034 bond closed at 6.86% yield, against 6.87% yield on Tuesday. The turnover was ₹524.65 billion, lower than ₹606 billion on Monday.
- Corporate Bond Beat: Yields were steady in the secondary market as traders avoided placing significant bets ahead of the release of the US Federal Reserve's July meeting minutes. Deals aggregating to ₹115.54 billion were recorded on the exchanges, against ₹123.05 billion on Tuesday.
- Forex Flash: The rupee logged its biggest single-day fall in nearly two months, ending 0.2% lower at 83.9225 against the dollar. The decline was due to foreign and state-owned banks buying dollars for corporate fund outflows and importers. The rupee fluctuated within a 13-paise range.
- Stocks Spotlight: Benchmark indices closed higher after a volatile session, driven by gains in insurance, pharmaceuticals, and FMCG stocks. The Nifty 50 extended its winning streak to five sessions. The Sensex rose 0.13% to 80,905.30, while the Nifty increased 0.29% to 24,770.20.
International Markets
- US Stocks: Stocks rose on Wednesday after investors digested a sharp payrolls downgrade and the Federal Reserve minutes, which reinforced expectations for a September rate cut. All three major US market indexes closed slightly higher, with chip companies lifting the Nasdaq. The Dow Jones rose 0.14% to 40,890.49, the S& P 500 rose 0.42% to 5,620.85, and the Nasdaq Composite increased 0.57% to 17,918.99.
- Treasuries: Yields fell on Wednesday after revised US jobs data and Fed minutes fuelled expectations that the upcoming rate-cutting cycle will be bold. The benchmark US 10-year notes yield declined 2.3 basis points to 3.795% from 3.818% late Tuesday. The two-year yield, which normally moves in tandem with interest-rate predictions, slipped 6.9 basis points to 3.9305% from 4% late Tuesday.
- Currency: The dollar sank to a more than one-year low versus the euro and sterling on Wednesday after data showed companies added 818,000 fewer jobs than expected in the year to March. This comes before Federal Reserve Chair Jerome Powell's highly anticipated speech at the Kansas City Fed's Jackson Hole economic conference on Friday, which will be watched for labour market insights.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 321 | 1565 | 812 | 852 | 20 |
| Financial Institution | 270 | 1435 | 269 | 470 | 65 |
| Private Sector Bank | 850 | 275 | 1 | 1227 | - |
| Housing Finance Company | 50 | 225 | 507 | 282 | - |
| Diversified | 150 | - | 120 | 500 | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.36 NBFID 12AUG44 | 2024-08-13 | 1335 | 7.35 | 7.35 |
| 8.25 SBICARDS 08AUG34 | 2024-08-08 | 914 | 8.24 | 8.21 |
| 8.00 IIDL 29OCT29 | 2024-08-13 | 711 | 8.01 | 8.00 |
| 0% 360ONEPRIME 13MAR26 | 2024-08-08 | 164 | 9.00 | 9.00 |
| 9.75 SAMMAAN CAPITAL LIMITED 12APR2028 | 2024-08-12 | 150 | 9.65 | 9.75 |
| 7.95 IIDL 13AUG39 | 2024-08-13 | 125 | 7.95 | 7.94 |
| 8.05 AXISFIN 25APR28 | 2024-08-09 | 119 | 8.02 | 8.03 |
| 8.90 MUTHOOT FINANCE 07OCT27 | 2024-08-07 | 100 | 8.92 | 8.91 |
| 7.99 RCFL 07AUG27 | 2024-08-07 | 100 | 7.99 | 7.99 |
| 8.28 PNB HFL 30DEC26 | 2024-08-07 | 100 | 8.31 | 8.31 |
| 8.49 ADITYA BIRLA SUN LIFE INSURANCE COMPANY LTD - C 12AUG2034 M | 2024-08-12 | 96 | 8.48 | 8.48 |
| 7.95 ICICI HFL 16NOV27 | 2024-08-16 | 80 | 7.97 | 7.97 |
| 9.85 NUVAMAWEALTH 09AUG27 | 2024-08-08 | 55 | 9.57 | 9.15 |
Source: Harmoney data analytics
Events This Week
August 22, Thursday:
- US Unemployment insurance weekly claims report for Aug 17 week.
- US Weekly export sales.
- US PMI data for August.
- US Existing home sales for July.
- India PMI data for August.
August 23, Friday:
- US New residential sales for July.
- India Bank loan growth for Aug 9 week.
- India deposit growth for Aug 9 week.
- India Foreign exchange reserves for Aug 16 week.
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