Bond yields edged lower on improved liquidity conditions, which was on back of month-end government spending and rupee injections from the RBI's dollar-buying intervention. However, further slide of yields is unlikely as govt will sell four dated securities for Rs 15,000 crore on July 4, 2014. Meanwhile, bonds can remain range-bound until the budget, which will unveil key details about the fiscal deficit target and government borrowing for the remainder of the fiscal year ending in March 2015.
On the global front, U.S. benchmark Treasuries yields eased from two-month highs on Thursday to trade slightly higher after traders reconsidered a strong U.S. June nonfarm payrolls report and reacted to comments from European Central Bank chief Mario Draghi. Meanwhile, Brent futures held steady around $111 a barrel on Friday on signs of an improving demand outlook, although the benchmark is still set to post its biggest weekly loss since early January as supply worries that have rattled oil markets for weeks recede.
Back home, the yields on new 10 year Government Stock 2023 were trading 2 basis points lower at 8.64% from its previous close of 8.66% on Thursday.
The benchmark five-year interest rate swaps were trading unchanged at its previous close of 7.82% on Thursday.
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.