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Bond yields trade range-bound ahead of outcome of fed’s two day meeting

28 Oct 2014 Evaluate

Bond yields were trading range-bound on Tuesday ahead of conclusion of the two-day U.S. Fed meeting on Wednesday, which holds key for near-term direction. Also, not much of momentum is being witnessed as markets take breather from the recent rally.

Street widely expects Federal Reserve to end its bond-buying program in its two-day meeting. The central bank has gradually reduced its purchases since the start of this year. On Monday, the Fed conducted the last round of buying on Treasury bonds totaling $931 million out of $2.717 billion worth of bonds offered from primary dealer banks

On the global front, U.S. Treasury debt prices inched higher on Monday in a safe-haven bid on concerns about weak U.S. economic data and the steep drop in Brazil's stock market following the re-election of incumbent leftist Dilma Rousseff. Meanwhile, brent crude extended its decline to a third day, dropping towards $85 a barrel on Tuesday, still under pressure from a Goldman Sachs report that slashed the investment bank's oil price forecasts amid a global supply glut.

Back home, the yields on new benchmark 8.40%- 2024 bonds was trading 1 basis point higher at 8.33% from its previous close of 8.32% on Monday.

The benchmark five-year interest rate swaps were trading 2 basis points higher at 7.50% from its previous close of 7.48% on Monday.

The Reserve Bank of India has announced the auction of 364 and 91 day Government of India Treasury Bills for notified amount of Rs 6,000 crore and Rs 9000 crore respectively. The auction will be conducted on October 29, 2014 using 'Multiple Price Auction' method. 

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