Economist Claudia Sahm told Bloomberg that while the US was not yet in a recession, it was "uncomfortably close." She suggested central bank policymakers might adjust their approach due to rising risks. The July employment report showed a rise in the jobless rate to 4.3%, triggering the Sahm Rule, which signals a recession if the three-month moving average unemployment rate exceeds the 12-month low by half a percentage point. Back home, RBI Governor Shaktikanta Das will speak today after the MPC review, likely avoiding discussions on neutral interest rates, the Sahm Rule, and the feared US recession. He may instead focus on reiterating the MPC’s goal of reducing inflation to 4% while maintaining current interest rates.
Top 3 Leads Today
- Lok Sabha passes Finance Bill, amends LTCG tax provision on immovable properties.
- Moody's upgrades Tata Motors corporate family rating to Ba1 from Ba3.
- Balance sheet consolidated, RIL ready for next level of growth: Ambani.
Indian Markets
- Money Markets Minute: The call money market ended at the RBI's standing deposit facility rate of 6.25% amidst surplus liquidity. The one-day call money rate closed at 6.25% against 5.75% on Tuesday. The weighted average call rate closed at 6.48% from 6.41%.
- Government Bond Brief: Yields fell as traders anticipated the RBI's MPC shifting its stance to "neutral" from "withdrawal of accommodation." The 10-year 7.10%, 2034 bond closed at 6.86%, down from 6.88% Tuesday. Turnover increased to ₹608.15 billion from ₹585.60 billion.
- Corporate Bond Beat: Corporate bond yields remained steady in the secondary market ahead of the RBI's monetary policy outcome. Trade volumes were low, totalling ₹23.33 bln, down from ₹28.44 bln on Tuesday.
- Forex Flash: The rupee closed at a record low of 83.9550 against the dollar due to banks’ dollar purchases for importers and for foreign fund outflows from Indian equities. It traded within a 10-paise range, briefly hitting a lifetime low of 83.9725 before settling slightly below Tuesday's 83.9525.
- Stocks Spotlight: Benchmark indices snapped a three-day losing streak, closing higher with the Nifty near 24,300, driven by sector-wide buying and anticipation of a positive RBI policy outcome in the form of a dilution in stance to neutral. Despite profit booking during the day, the market ended strong. The Sensex rose 1.11% to 79,468.01, and the Nifty gained 1.27% to 24,297.50.
International Markets
- US Stocks: Wall Street equity indexes ended lower after a volatile session. Despite opening higher, the S&P 500 began losing momentum late in the morning and declined further following weak demand in a U.S. 10-year Treasuries auction. The Dow Jones Industrial Average fell 234.21 points (0.60%), the S&P 500 dropped 40.53 points (0.77%) to 5,199.50, and the Nasdaq Composite decreased by 171.05 points (1.05%) to 16,195.81.
- Treasuries: Yields rose after the Treasury Department saw soft demand for a $42-billion sale of 10-year notes and as companies rushed to sell debt with risk appetite improving. The 10-year note yield rose 7 basis points to 3.958%,. The 30-year bond yield rose 8.1 basis points to 4.2579%. The two-year note yield, which typically moves in step with interest-rate expectations, fell 0.2 basis points to 3.9827%.
- Currency: Against the Japanese yen , the dollar strengthened 1.75% to 146.83 after BoJ Governor Shinichi Uchida said the central bank will not raise interest rates while financial markets are unstable. The dollar index gained 0.2% at 103.19, with the euro down 0.08% at $1.0921.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| Financial Institution | 281 | 1382 | 1031 | 211 | - |
| NBFC | 87 | 1242 | 1238 | 127 | 35 |
| Housing Finance Company | - | 456 | 101 | 275 | - |
| Public Sector Bank | - | - | - | 399 | 10 |
| Private Sector Bank | 200 | - | - | 156 | - |
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 | 1670.00 | 7.38 | 7.38 |
| 9.10 CHOLAINVFIN 27JUN31 | 2024-07-31 | 1365.40 | 9.10 | 9.09 |
| 7.98 BAJAJ FINANCE 31JUL29 | 2024-07-31 | 762.00 | 7.97 | 7.95 |
| 8.01 TATACAPITAL 21JUL34 | 2024-07-23 | 427.00 | 7.99 | 7.94 |
| 7.80 BOM 05AUG34 | 2024-08-05 | 281.10 | 7.78 | 7.80 |
| 8.60 GODREJFINLTD 25NOV27 | 2024-07-25 | 250.00 | 8.65 | 8.66 |
| 8.50 GODREJHSGFIN 30NOV27 | 2024-07-30 | 240.00 | 8.55 | 8.57 |
| 7.39 IIFCL 01AUG39 | 2024-08-01 | 230.00 | 7.38 | 7.39 |
| 8.50 CHOLAINVFIN 25JUL27 | 2024-07-25 | 160.00 | 8.49 | 8.46 |
| 8.30 SMFG 30JUN27 | 2024-08-05 | 150.00 | 8.38 | 8.38 |
| 7.39 IREDALTD 24JUL34 C 22JUL39 M | 2024-07-24 | 130.00 | 7.38 | 7.38 |
| 8.1841 TFSIN 29SEP27 | 2024-08-01 | 90.00 | 8.20 | 8.20 |
| 9.75 INDIABULLS HOUSING 23JUL29 | 2024-07-23 | 69.03 | 10.95 | 11.60 |
| 15.00 TRUCREDITS 28JUL25 | 2024-07-23 | 60.00 | 19.08 | 19.08 |
| 10.30 IKFFIN 30JUL27 | 2024-08-01 | 55.10 | 11.16 | 10.52 |
| 9.90 TYGER CAPITAL PVT LTD - CALL 29JUL2027 | 2024-07-29 | 50.00 | 10.35 | 10.35 |
Source: Harmoney data analytics
Events This Week
August 8, Thursday:
- US Unemployment insurance weekly claims report for Aug 3 week.
- US Weekly export sales.
- US Monthly wholesale trade for June.
- India Interest rate decision.
- India Reverse REPO rate.
- India Cash reserve ratio.
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