Bond yields were trading near four-month low level on Wednesday as sentiments continued to remain bullish after a dovish central bank policy statement on Tuesday which hinted at the end of the rate tightening cycle. In Bi-monthly monetary policy statement, RBI underscored that if the economy stays on this course, further policy tightening will not be warranted, but on the other hand, if disinflation, adjusting for base effects, was faster than currently anticipated, this would provide headroom for an easing of the policy stance. However, the yields have now come off their lows on account of market-participants by dealers.
On the global front, US Treasuries yields rose to their highest in three weeks on Tuesday as investors reset bets that yields are likely to climb after they fell to 11-month lows last week. Meanwhile, brent crude held near $109 a barrel on Wednesday, as investors eyed U.S. oil inventory data and looked to euro zone policies they hope could spur growth and boost the region's energy demand.
Back home, the yields on new 10 year Government Stock 2023 were trading 2 basis points lower at 8.58% from its previous close of 8.60% on Tuesday
The benchmark five-year interest rate swaps were trading 8 basis points lower at 7.86% from its previous close of 8.94% on Tuesday.
The Reserve Bank of India has announced the auction of 91 and 182-days Government of India Treasury Bills for notified amount of Rs 8,000 crore and Rs 6000 crore respectively. The auction will be conducted on June 4, 2014 using 'Multiple Price Auction' method.
The Government of India announce the sale of Four dated securities for Rs 16,000 crore on June 6, 2014, including (i) New 6 Years Government Stock for Rs 4,000 crore , (ii) 8.83% Government Stock 2023 for a notified amount of Rs 7,000 crore, (iii) 8.32% Government Stock 2032 for a notified amount of Rs 3,000 crore and (iv) 8.30% Government Stock 2042 for a notified amount of Rs 2,000 crore.