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Bond yields edge lower on Arun Jaitley's comments

02 Jul 2014 Evaluate

Bond yields edged lower on Wednesday after Finance Minister Arun Jaitley warned against 'economic populism,' sparking hope for tough fiscal consolidation measures in the annual budget to be unveiled on July 10. He defined high fiscal deficit and inflation as major challenges for India, which in turn triggered hopes of fiscal consolidation measures in his new government’s annual budget, further contributing to the gains in bonds.

On the global front, U.S. Treasuries yields rose on Tuesday after traders reconsidered bullish bets on U.S. bonds ahead of Thursday's U.S. nonfarm payrolls report, while strong U.S. and Chinese manufacturing data stymied safe-haven bids. Meanwhile, brent futures held above $112 a barrel on Wednesday as lingering worries over the threat of a sudden worsening in the Iraq crisis supported prices, while a possible reopening of two oil terminals in Libya kept the gains in check.

Back home, the yields on new 10 year Government Stock 2023 were trading 4 basis points lower at 8.70% from its previous close of 8.74% on Tuesday.

The benchmark five-year interest rate swaps were trading 1 basis point lower at 7.86% from its previous close of 7.87% on Tuesday. 

The Reserve Bank of India has announced the auction of 91 days and 182-days Government of India Treasury Bills for notified amount of Rs 6,000 crore and Rs 9000 crore respectively. The auction will be conducted on July 02, 2014 using 'Multiple Price Auction' method.

The government of India have announced the sale of four dated securities for Rs 15,000 crore on July 4, 2014, including (i) 8.35% Government Stock 2022 for Rs 3000 crore, (ii) 8.60% Government Stock 2028 for a notified amount of Rs 7000 crore, (iii) 9.20% Government Stock 2030 for a notified amount of Rs 3000 crore and lastly (iv) 9.23% Government Stock 2043 for a notified amount of Rs 2000 crore. 

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