Bond yields edged lower as expectations of an interest rate cut early next year were reinforced after the Reserve Bank of India kept rates unchanged in Tuesday's review of monetary policy. RBI keeps the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent. Consequently, the reverse repo rate remains unchanged at 7.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per cent
On the global front, U.S. Treasuries ended a six-session rally on Monday, with prices surrendering early gains and turning down on profit-taking ahead of Friday's key U.S. unemployment report. Meanwhile, U.S. crude fell more than $2 to a five-year low in Asian trade on Monday, while Brent crude slipped below $72 a barrel on Tuesday, giving up some of the gains seen on Monday when prices rallied for the first time in six sessions and closed up more than 3 percent.
Back home, the yields on new 10 year Government Stock 2023 was trading 5 basis points lower at 8.01% from its previous close of 8.05% on Monday.
The benchmark five-year interest rate swaps were trading 6 basis points lower at 7.10% from its previous close of 7.16% on Monday.
The Reserve Bank of India has announced the auction of 91 and 182 days Government of India Treasury Bills for notified amount of Rs 8,000 crore and Rs 6,000 crore respectively. The auction was conducted on December 03, 2014 using 'Multiple Price Auction' method. The allocation to the non-competitive bidders will be outside the notified amount at the discretion of the Bank.