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Bond yields edge lower on tight liquidity conditions ahead of long weekend

22 Oct 2014 Evaluate

Bond yields were trading lower on account of tighter liquidity conditions ahead of long weekend. Money markets remain closed on Thursday and Friday on account of ‘Diwali Laxmi Pujan’ and ‘Balipratipada’ respectively.

Besides, the yields also edged lower as foreign funds continue to buy bonds amidst no signs of that the $25-billion limit on government securities were close to being exhausted. Overseas portfolio investors have used up nearly half the overall investment limit in corporate bonds compared with 37% four months ago

On the global front, US Treasuries prices fell on Tuesday as less worrisome data on China and a report on the European Central Bank possibly moving to buy regional corporate bonds allayed some concerns about the global economy and reduced safe-haven bids for low-risk government debt. Meanwhile, brent crude futures steadied above $86 a barrel on Wednesday, clinging to gains from the previous session as buyers gradually returned to a market hammered to four-year lows by abundant supply.

Back home, the yields on new benchmark 8.40%- 2024 bonds was trading 1 basis point higher at 8.38% from its previous close of 8.37% on Tuesday.

The benchmark five-year interest rate swaps was trading 1 basis point lower at 7.51% from its previous close of 7.52% on Tuesday.

The Reserve Bank of India has announced the auction of 91 and 182 day Government of India Treasury Bills for notified amount of Rs 9000 and Rs 6000 crore respectively. The auction will be conducted on October 22, 2014 using 'Multiple Price Auction' method.

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