The Federal Reserve dropped interest rates by 25 basis points on Thursday as the employment situation "generally eased" and inflation approached 2%. "Economic activity has continued to expand at a solid pace," the Federal Open Market Committee said after a two-day policy meeting in which members decreased the benchmark overnight interest rate to 4.50%-4.75%, as expected. The decision was unanimous. In a news conference following the announcement, Fed Chair Jerome Powell stated that Republican Donald Trump's election as president will have no immediate impact on policy decisions. He also stated that some of the economy's negative risks have reduced as economic data has improved.
Top 3 Leads Today
- In talks with ESMA about CCIL, may strike deal similar to BoE, says RBI Sankar
- SEBI's conflict of interest code can only be upgraded by govt, says member.
- Confident of crossing ₹11.5 trillion AUM in next 2 months, says SBI MF dy MD Singh.
Indian Markets
- Money Markets Minute: The call rate ended below the RBI's standing deposit facility rate of 6.25% on Thursday, as banks had low demand for funds due to abundant liquidity in the system. The one-day call money rate closed at 5.75%, down from 6.35% on Wednesday, while the weighted average call rate rose slightly to 6.42% from 6.34%.
- Government Bond Brief: Yields remained steady as traders awaited the U.S. FOMC meeting's outcome. The 10-year benchmark 7.10%, 2034 bond closed at a yield of 6.82%, slightly lower than Wednesday’s 6.83%. Market turnover reached ₹333.50 billion, down from ₹591.00 billion the previous day.
- Corporate Bond Beat: Yields on corporate bonds in the secondary market remained steady as investors held back from making aggressive moves ahead of the U.S. Federal Open Market Committee meeting's outcome. Trading volumes were slightly higher, with deals totalling ₹87.44 billion, compared with ₹42.17 billion on Wednesday.
- Forex Flash: The rupee closed at a record low of 84.37 against the dollar, as persistent dollar buying by banks on behalf of importers weighed on the currency amid expectations of further depreciation. The rupee remained within a narrow 12-paise range during the session, having also hit this lifetime low just before the domestic market closed. This decline follows Wednesday's close of 84.31.
- Stocks Spotlight: The Indian market’s enthusiasm over Donald Trump's U.S. presidential election win was short-lived, lasting only a day. On Thursday, both the Nifty 50 and Sensex erased nearly all of Wednesday's gains, marking the end of a two-day winning streak. The Nifty 50 closed at 24,199.35 points, down 1.2%, while the Sensex ended at 79,541.79 points, down 1%.
International Markets
- US Stocks: The benchmarks closed higher on Thursday after the Federal Reserve handed down a 25-basis point interest rate cut, extending a sharp rally inspired by Donald Trump's return as president. The Dow index closed unchanged at 43,729.34, the S&P 500 rose 0.74% to 5,973.10, and the Nasdaq rose 1.51% to 19,269.46.
- Treasuries: Yields fell further after the Federal Reserve slashed interest rates and as investors prepared for a second Donald Trump presidency. As expected, the Fed dropped rates by 25 basis points on Thursday, observing that the employment market has largely eased, and inflation is moving toward its 2% target. It said price pressures have "made progress," compared to "made further progress." The benchmark 10-year yield was 4.3355%, down 9 basis points following a 14-basis point rise on Wednesday, and the 30-year yield was 4.5393%, down over 6 bps after Wednesday's 15 bp jump.
- Currency: The dollar lost 0.7% against a basket of peers after posting its largest one-day increase in over two years on Wednesday. Traders said they were closing out profitable bets on Trump's presidency ahead of the Fed's decision. The euro rose 0.7% to $1.0803 after Wednesday's 1.8% drop as markets absorbed political instability in Germany, where Chancellor Olaf Scholz fired Finance Minister Christian Lindner, leading the ruling three-party coalition to dissolve and laying the path for a quick election.
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 | 1355 | 400 | 222 | 262 | - |
| NBFC | 315 | 1325 | 361 | 85 | - |
| Private Sector Bank | 1050 | 550 | - | 11 | - |
| Housing Finance Company | 185 | 151 | 203 | 147 | - |
| Telecom | - | 685 | - | 1 | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.98 SBI PERP 24OCT34 C | 2024-10-24 | 1264 | 7.97 | 7.93 |
| 8.96 SHRIRAM FINANCE 24OCT27 | 2024-10-24 | 380 | 8.96 | 8.95 |
| 7.32 IREDA 04NOV29 | 2024-11-04 | 311 | 7.32 | 7.32 |
| 7.43 JUPL 24OCT34 | 2024-10-24 | 295 | 7.43 | 7.42 |
| 7.05 INDIAN BANK 25OCT34 | 2024-10-25 | 280 | 7.15 | 7.18 |
| 7.8750 NIIF 28NOV30 | 2024-10-24 | 155 | 7.87 | 7.87 |
| 7.7980 L&T FINANCE 28DEC29 | 2024-10-28 | 130 | 7.80 | 7.80 |
| 7.65 SUNDARAM HOME FINANCE 29OCT29 | 2024-10-29 | 100 | 7.64 | 7.64 |
| - SURYAPET KHAMMAM ROAD PRIVATE LTD - C 30JUN2031 M | 2024-10-24 | 93 | 8.57 | 8.44 |
| - SURYAPET KHAMMAM ROAD PRIVATE LTD - C 30JUN2035 M | 2024-10-24 | 54 | 8.24 | 8.24 |
| 7.72 ICICI HOME FINANCE 28SEP29 | 2024-10-25 | 50 | 7.72 | 7.72 |
Source: Harmoney data analytics
Events This Week
November 8, Friday:
- India FX Reserves for Nov 1 week.
For any inquiries or assistance related to market data, please reach out to us at support@harmoney.in