Bond yields edge higher on value buying; spike in global crude oil weighs pressure

09 Apr 2014 Evaluate

Bond yields edged up after a day’s break on account of value buying activities by market-participants. However, the uptrend of the yields was also on account of overnight spurt in global crude oil prices, which could potentially add to domestic inflationary pressure as India imports more than half of its oil requirements. Nevertheless, the uptrend of yields was limited on account of selection of papers for this week's bond sale, which was largely in line with market expectations.

The government of India announced the sale of four dated securities for Rs 16,000 crore on April 11, 2014, which includes (i) 7.80% Government Stock 2020 for a notified amount of Rs 3,000, (ii) 8.83% Government Stock 2023 for a notified amount of Rs 8,000, (iii) 8.32% Government Stock 2032 for a notified amount of Rs 8.32% Government Stock 2032 of Rs 3,000 crore and lastly (iv) 8.30% Government Stock 2042 for a notified amount of Rs 2,000 crore on April 11,2014.

On the global front, U.S. Treasuries prices rose on Tuesday after the government sold $30 billion in new three-year notes to better-than-average demand, and as investors looked ahead to the release of the minutes from the Federal Reserve's March meeting on Wednesday. Brent futures held steady above $107 a barrel as geopolitical tensions over Ukraine worsened, overshadowing U.S. industry data that showed crude stockpiles in the world's largest oil consumer rose nearly six times more than expected.

The yields on new 10 year Government Stock 2023 were trading 2 basis points higher at 9.12% from its previous close of 9.10% on Monday.

The benchmark five-year interest rate swaps were trading 2 basis points higher at 8.62% from its previous close of 8.60% on Monday.

Reserve Bank of India will conduct a 14-day term repo variable rate auction for a notified amount of Rs 40,000 crore on March 21, 2014. The reversal of the 14-day term repo will take place on April 4, 2014.

The Reserve Bank of India has announced the auction of 91 and 182 days Government of India Treasury Bills for notified amount of Rs 9,000 crore and Rs 6000 crore respectively. The auction will be conducted on April 9, 2014 using 'Multiple Price Auction' method.

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