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Bond yields soften down after economy survey calls for tough measures

09 Jul 2014 Evaluate

Bond yields edged lower after the economic survey called for tough measures to shore up public finances and reduce inflation, sparking hopes of a non-populist, prudent budget on Thursday. Additionally, some comfort which came to market-participants after the survey said it expects inflation to moderate this fiscal year, which could allow RBI to cut interest rates, also aided sentiment.

On the global front U.S. Treasuries prices rallied on Tuesday as investors raised stakes in bonds because of stock market losses ahead of corporate earnings, and overseas trade data that fuelled worries about global economic growth. Meanwhile, brent crude fell below $109 a barrel on Wednesday as Libya restarted an oilfield, on track to drop for an eighth session in what would be its longest losing streak in over four years.

Back home, the yields on new 10 year Government Stock 2023 were trading 3 basis points lower at 8.70% from its previous close of 8.73% on Tuesday.

The benchmark five-year interest rate swaps were trading 1 basis point lower at 7.85% from its previous close of 7.86% on Tuesday.

The Government of India would announce the sale of four dated securities for Rs 15,000 crore on July 11, 2014, including (i) 8.27% Government Stock 2020 for a notified amount of Rs 3000 crore, (ii) 8.83% Government Stock 2023 for a notified amount of Rs 7000 crore, (iii) 8.32% Government Stock 2032 for a notified amount of Rs 2000 crore and lastly (iv) 8.30% Government Stock 2042 for a notified amount of Rs 3000 crore respectively.

The Reserve Bank of India has announced the auction of 364 and 91 days Government of India Treasury Bills for notified amount of Rs 6,000 crore and Rs 9000 crore, to be conducted on July 09, 2014 using 'Multiple Price Auction' method.

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