Bond yields spurted on profit-booking activities on doubts about whether India could afford to cut interest rates given risk associated to this move that could trigger foreign outflow. Meanwhile, India’s trade deficit, which widened to 18-month high of $16.86 billion in month of November, as compared to $9.57 in the same month previous year and $13.36 billion in the previous month in October, also weighed on the sentiment.
On the global front, long-dated U.S. Treasuries yields fell on Monday as oil prices dropped to five-year lows, denting inflation expectations and raising the appeal of long-maturity bonds over shorter-dated issues. An early rebound in oil prices faded after OPEC exporters said they would not cut production despite worries about a supply glut.
Back home, the yields on new 10 year Government Stock 2023 were trading 9 basis points higher at 7.92% from its previous close of 7.83% on Monday.
The benchmark five-year interest rate swaps were trading 14 basis points higher at 7.26% from its previous close of 7.12% on Monday.
The Reserve Bank of India will conduct overnight repo variable rate auction for a notified amount of Rs 25,000 crore on December 16, 2014. The auction will be conducted between 4.00 pm and 4.30 pm as per the revised guidelines on Term Repo Auctions issued on February 13, 2014.