Domestic markets look forward to the H2 borrowing calendar
|The US presidential debate was quite chaotic with both participants digressing from key themes many times. The markets have not reacted much to the debate either as there is nothing conclusive it could glean from it.
The focus over the next couple of days would be on the US job market. We have the ADP private payroll data today, jobless claims tomorrow and September NFP on Friday. If the recovery in job market is seen to be plateauing, a second fiscal stimulus package would become very important to sustain the recovery as spending power would take an enormous hit in Q4 in the absence of one.
The US Dollar has weakened overnight. The Euro is back above the 1.17 handle. US real rates have moved lower.
The Rupee continues to trade in the 73.50-73.90 range. We expect the range to hold today as well. There are several Inflows lines over the next few sessions and that should cap up side in USD/INR. Asian currencies are trading mixed.
Markets would look forward to the borrowing calendar today. The nervousness in the bond markets seems to be mounting. The states are borrowing at higher spreads over central government securities. The spread between 10y SDLs and Gsecs which used to be 60bps couple of weeks back has widened to 90bps.
Strategy: Exporters are advised to cover confirmed order on upticks. Importers are advised to cover through options. The 3M range for USDINR is 72.50 – 74.50 and the 6M range is 72.50 – 75.40.
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