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Bond yields tread water on Tuesday ahead of Fed’s meeting

16 Sep 2014 Evaluate

Bond yields were treading water on Tuesday on account of caution ahead of RBI's Rs 20,000 crore bond buyback amidst global anxiety ahead of the Fed meeting later in the day, wherein investors across the globe are gearing up for a hawkish statement from the US central bank.

The Reserve Bank will conduct overnight repo variable rate auction for a notified amount of Rs 20,000 crore today (September 16, 2014, Tuesday). The auction will be conducted between 3.00 PM and 3.30 PM as per the revised guidelines on Term Repo Auctions issued on February 13, 2014.

On the global front, U.S. Treasury debt prices rose on Monday as bargain hunters bought on signs of spotty economic growth, which could slow the Federal Reserve's shift away from loose monetary policies. Meanwhile, brent crude oil slipped towards $97 a barrel on Tuesday, weighed by weak economic data from the world's two biggest energy consumers which pointed to weak demand growth at a time of strong supply.

Back home, the yields on new benchmark 8.40%- 2024 bonds were trading 1 basis point higher at 8.51% from its previous close of 8.50% on Monday.

The benchmark five-year interest rate swaps were trading 2 basis points lower to 7.95% from its previous close of 7.97% on Monday.

The Reserve Bank of India has announced the auction of 91 and 364 days Government of India Treasury Bills for notified amount of Rs 7000 and Rs 5000 crore respectively. The auction will be conducted on September 17, 2014 using 'Multiple Price Auction' method.

The Government of India have announced the sale (re-issue) of four dated securities for Rs 12,000 crore on September 19, 2014, including (i) 8.27% Government Stock 2020 for a notified amount of Rs 2000 crore, (ii) 8.40% Government Stock 2024 for a notified amount of Rs 6000 crore, (iii) 8.32% Government Stock 2032 for a notified amount of Rs 2000 crore and lastly (iv) 9.23% Government Stock 2043 for a notified amount of Rs 2000 crore respectively.

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