Debt Market Watch 09th March 2026 by GEPL Capital
Government Security Market Update:
The Reserve Bank of India (RBI), has stepped up its intervention in the government securities market this week, purchasing bonds on-screen. The move is likely aimed at offsetting liquidity drained by its actions in the foreign exchange market and ensuring that transmission momentum does not stop. Yield on the 10-year benchmark bond, which opened at 6.72% on Wednesday, eased to 6.67% during the day. Yields softened further on Thursday to close at 6.64% and again on Friday the yield tested 6.72% and managed to close at 6.69% on aggressive buying in “Others” category by the RBI. Purchases under this category climbed to '17,254 crores on Thursday, and '20,285 crore on Wednesday, compared with '8,602 crore and '7,484 crore earlier this week. The 'Others' category was the only category purchasing bonds on Thursday. All other categories, which include private banks, foreign banks, PSUs, mutual funds and primary dealers sold bonds, data shows. The 'Others' category has bought net '52,200 crores worth of bonds over the past nine days, and nearly 39% of these purchases were made on Wednesday, according to CCIL data. India's overnight index swap (OIS) rates were up for a fourth day, as surging oil kept sentiment cautious. The one -year OIS rose 3.75 bps to 5.5825%, while the two-year and the five-year OIS rates were up around 6.5 bps at 5.75% and 6.1725% respectively. Earlier during the week the thirteen states sold 5 to 29 years loans in the range of 6.91 to 7.7037% and in the Treasury bill auction the Reserve Bank of India sold 91; 182 & 364 DTB at a yield of 5.3126; 5.5340 & 5.60% respectively. In a weekly and the last scheduled of this FY the government sold 6.68% GS 2040 & 6.90% GS 2065 at a yield of 7.0848 & 7.4940% respectively. The yield on the 6.48% Government bond due Oct 2035 rose to 6.6898% from 6.6601% last week
Global Debt Market Update:
The benchmark U.S.10-year Treasury yield fell less than 1 basis point to 4.138%. The 2-year Treasury yield was down more than 4 basis points at 3.554%. The spread between the 2-year and the 10-year Treasury widened to more than 58 basis points, which might reflect higher expectations of future inflation. The move higher in Treasury yields came after U.S. West Texas Intermediate topped $90 a barrel on the seventh day of the Iran war as President Donald Trump demanded an unconditional surrender from the Islamic Republic. Global oil benchmark Brent crude broke above $92 a barrel. Fixed-income investors looked past a surprise decline in February payrolls, with U.S. employers unexpectedly shedding 92,000 jobs in February and the unemployment rate rising to 4.4%. Economists polled by Dow Jones has expected the Bureau of Labor Statistics to say 50,000 jobs were added to the economy last month, and unemployment would be unchanged at 4.3%
Bond Market Ahead:
The Indian bond market enters the week, amidst a shift in the domestic macroeconomic landscape, marked by a new GDP series and a revised CPI basket. Traders are currently balancing a stable domestic “neutral” policy stance against significant geopolitical volatility in the Middle East. The Brent crude surpassing $92 a barrel, will be a cause of concern for the Indian bond market as it will push the inflation up. Post market hours, the Reserve Bank of India announced Rs.1 lakh crore worth of bond purchases through open market operations in two tranches of Rs.50,000 crore each on March 9 & 13, to address liquidity tightness expected due to advance tax outflow this month. Market participants estimate that advance tax and GST payment could drain close to Rs.4 lakh crore from the system, potentially pushing liquidity into deficit territory. The escalation in the geo-political tension at Middle East has spoked the crude oil prices and if it continues for the extended period the policymakers have to revise their inflation and interest rates outlook in the Monetary Policy review meetings. The securities eligible for purchase on March 9 include the 6.01% GS 2030; 6.10% GS 2031; 7.18% GS 2033; 6.19% GS 2034; 6.33% GS 2035; 6.92% GS 2039 and 7.30% GS 2053. The OMO basket consists of the liquid securities and will help in aligning the yield curve and the timing for the OMO purchase is very appropriate as it will maintain the yields and liquidity.
Bond Strategy:
* Buy 6.48% GS 2035 around 6.70 to 6.71% with a target of 6.65% and a stop loss of 6.75%.
* Buy 6.68% GS 2040 around 7.09 to 7.10% with a target of 7.05% and a stop loss of 7.14%.
* Buy 6.90% GS 2065 around 7.48 to 7.49% with a target of 7.45% and a stop loss of 7.52%.
SEBI Registration number is INH000000081.
Please refer disclaimer at https://geplcapital.com/term-disclaimer
