Bond yields, recovered from a seventeen month low scaled in early deals mainly on account of profit-booking activities. The yields edged lower on hopes of rate cut in early February after data showed lower retail inflation. However, yields recovered even after November WPI data further bolstered these hopes.
On the macro-front, the annual rate of inflation, based on monthly WPI, easing for sixth straight month, ebbed to five and half year low figure 0.0% (provisionally) for the month of November, 2014 as compared to 1.77% for the previous month and 7.52% during the corresponding month of the previous year.
On the global front, U.S. Treasury yields fell on Friday as a relentless slide in crude oil prices hurt stocks and increased demand for safe-haven U.S. debt on concerns about falling inflation. Meanwhile, brent crude futures fell as much as 2.5 percent on Monday to a new five-year low near $60 a barrel after the International Energy Agency forecast further price falls and OPEC's chief defended the group's decision not to cut its output target.
Back home, the yields on new 10 year Government Stock 2023 were trading 2 basis points lower at 7.81% from its previous close of 7.83% on Friday.
The benchmark five-year interest rate swaps were trading 3 basis points lower at 7.07% from its previous close of 7.10% on Friday.
The Reserve Bank of India will conduct overnight repo variable rate auction for a notified amount of Rs 10,000 crore on December 15, 2014. The auction will be conducted between 4.00pm and 4.30pm as per the revised guidelines on Term Repo Auctions issued on February 13, 2014.
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