Expect new 10-yr to trade in the range of 7.60-7.67%: BoAML

In an interview to CNBC-TV18, Jayesh Mehta, MD and Country Treasurer of Bank of America spoke about the bond as well as the rupee market.

In an interview to CNBC-TV18, Jayesh Mehta, MD and Country Treasurer of Bank of America spoke about the bond as well as the rupee market.

Below is the transcript of Jayesh Mehta's interview with Ekta Batra & Anuj Singhal.

Ekta: What is your sense in terms of what the bond markets are factoring in terms of future rate cuts? How much and by when?

A: It has become quite uncertain at this juncture with intermittent rate cut and stuff like that. So, at this juncture, bond market after particularly yesterday's data, whatever little hope was there for April rate cut, is out. People are still expecting June rate cut, maybe another 50 basis points rate cut in the next six to eight months. June, we will have to see how it pans out because Fed hiking kind of situation somewhere around June 16th or 17th. Will they really do it 15 days before; unless the entire quarter percent or something is priced out? So that is one factor.

As of now market is not looking at it but that is one factor. So June also could look little difficult. In that situation, you are looking at the old 10-year, which will become the old 10-year in sometime in the range of 7.70-7.85 catching 5 basis points on either side. It is a lot of data related situation. You also need to see what happens on the ground economy whether the stalled projects and all that make Reserve Bank of India (RBI) comfortable. If there is work happening on that. And also on the positive side, yesterday there was some article about foreign institutional investor (FII) limit. If that comes through, the whole thing can tend down by 10 basis points. So, at this juncture, it is quite fluid market with not really any expectations sideways, depending on some trigger, news might move by 5-1 basis points plus-minus.

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