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Bond yields edge lower on bargain buying activities

31 Jul 2014 Evaluate

Bond yields were trading lower on account of bargain buying activities and also as fall in brent crude combined with lower US treasury yields overnight, aided the sentiment. the yield on soon to be benchmark 8.40%- 2024 bond have been inching lower even after RBI’s announcement of introducing this new paper in its upcoming debt sale worth Rs 14,000 crore.

On the global front, U.S. Treasuries yields surged on Wednesday and two- and three-year note yields rose to their highest in three years after data showed solid U.S. economic growth, though the Federal Reserve said it is in no rush to raise interest rates. Meanwhile, Brent crude slipped towards $106 a barrel on Thursday and was set to post its biggest monthly loss in more than a year as higher OPEC output and disappointing demand in the United States outweighed tensions in the Middle East and Africa.

Back home, the yield on soon to be benchmark 8.40%- 2024 bond fell 1 basis point lower at 8.50% from its previous close of 8.51% on Wednesday.

The yields on outgoing benchmark 2023, 10-year Government Stock were trading 1 basis point lower at 8.72% from its previous close of 8.73% on Wednesday.

The benchmark five-year interest rate swaps were trading 2 basis points lower at 7.88% from its previous close of 7.90% on Wednesday.

The Governments of India have announced the sale (re-issue) of three dated securities for Rs 14,000 crore on August 1, 2014, including (i) 8.27% Government Stock 2020 for a notified amount of Rs 3000 crore); (ii) 8.40% Government Stock 2024 for a notified amount of Rs 9000 crore and (iii) 9.23% Government Stock 2043 for a notified amount of Rs 2000 crore.

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