Bond yields edged higher as buying interest remained limited with dealers preferring to stay light, drawing closer towards the end of the year. Nevertheless, yields also edged a tad higher on concerns over the fiscal deficit after reports suggested that a discussion between finance ministry officials and economists debated the roadmap of fiscal consolidation. Some reports suggested that the fiscal deficit is likely to be around 4 percent in 2015/16.
On the global front, long-dated US Treasury prices ended higher on Wednesday and the yield curve resumed flattening as investors bet that the Federal Reserve is closer to raising interest rates. Meanwhile, brent crude oil futures gave up most of its early gains on Friday as a building supply glut and weak Japanese import data weighed on the market, but contracts held above $60 a barrel supported by U.S. economic data published over Christmas.
Back home, the yields on new 10 year Government Stock 2023 was trading 1 basis point higher at 7.97% from its previous close of 7.96% on Wednesday.
The benchmark five-year interest rate swaps were trading flat at Wednesday’s close of 7.29%.
The Government of India have announced the sale (re-issue) of the Government Stock worth Rs 14,000 crore through auctions to be held on December 26, 2014, including (i) 8.08 per cent GS 2022 for a notified amount of Rs 2000 crore, (ii) 8.15 per cent GS 2026 for a notified amount of Rs 6000 crore, (iii) 9.20 per cent GS 2030 for a notified amount of Rs 3000 crore and lastly, (iv) 8.30 per cent GS 2040 for a notified amount of Rs 3000 crore.
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