Bond yields were treading water on account of prevailing cautiousness ahead of key macroeconomic data, i.e, consumer price index (CPI)-based inflation and Index of Industrial Production (IIP) data on Friday. While, the street expects CPI inflation to be around 4.4% in November compared with 5.52% in October, IIP is expected to grow 2.7% in October compared with 2.5% in September. Markets will also be watching trade deficit data for November, which can be announced any time this month.
On the global front, U.S. government bonds rallied and 30-year Treasury yields dropped to their lowest in almost two months on Tuesday as falling equity markets and oil prices increased demand for safe-haven U.S. debt. Meanwhile, Brent crude dropped around $1 a barrel on Wednesday, resuming its fall caused by a glut of oil in the market after a short-lived reprieve the previous day when a weaker dollar had provided some support.
Back home, the yields on new 10 year Government Stock 2023 were trading steady at Tuesday’s close of 7.90%.
The benchmark five-year interest rate swaps were trading 2 basis points lower at 7.14% from its previous close of 7.16% on Tuesday.
The Reserve Bank of India has announced the auction of 91 and 364 day Government of India Treasury Bills for notified amount of Rs 8,000 crore and Rs 5,000 crore respectively. The auction will be conducted on December 10, 2014 using 'Multiple Price Auction' method.