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Bond yields tread water ahead of release of IIP and CPI data

12 Jun 2014 Evaluate

Bond yields were treading water ahead of the release of crucial April IIP and May CPI data, which is scheduled to be released in the later part of the session. As per reports, Indian economic data is likely to offer some cheer by showing a pick-up in industrial activity and easing inflation. While, Output from mines, utilities and factories is expected to have expanded 1.9% in April from a year earlier after falling 0.5 percent the previous month, May CPI is expected to ease a bit.

Meanwhile, the yields fell sharply after reports suggested that finance ministry may issue a new 10-year bond only after the budget is finalized. The country attracted Rs 9361 crore ($1.58 billion) worth of bids from foreign investors in its auction of government debt limits on Wednesday, higher than the Rs 7152 crore on offer.

On the global front, US Treasury debt prices ended flat to slightly lower on Wednesday in thin trading, after a lackluster 10-year auction that raised concerns about weakening demand for long-term government paper. Meanwhile, Brent crude was up near $110 on Iraq supply disruption fears.

Back home, the yields on new 10 year Government Stock 2023 were trading steady at its previous close of 8.54% on Wednesday.

The benchmark five-year interest rate swaps were trading 2 basis points lower at 7.80% from its previous close of 7.82% on Wednesday.

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