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Bond yields decline on expectation of further rate cuts

16 Jan 2015 Evaluate

Bond yields continue with its declining spree on Friday on expectation of further rate cuts after the surprise cut on Thursday. However, further slide of yields was limited as dealers kept on the sidelines ahead of Rs 14,000 core debt sale auction.

On the global front, US Treasury 30-year bond yields tumbled to record lows as the collapse in oil and commodity prices smother inflation and hamper global economic growth. Meanwhile, Brent futures edged higher on Friday, holding above $48 a barrel on positive technical price momentum, although few analysts expect a strong rebound anytime soon as global output continues to outweigh demand.

Back home, the yields on new 10 year Government Stock 2023 was trading 1 basis point lower at 7.68% from its previous close of 7.69% on Thursday.

The benchmark five-year interest rate swaps were trading 7 basis points lower at 6.83% from its previous close of 6.90% on Thursday.

The Government of India announce the sale of Four dated securities for Rs 14,000 crore on January 16, 2015, including (i) 8.08% Government Stock 2022 for a notified amount of Rs 3000 crore, (ii) 8.15% Government Stock 2026 for a notified amount of Rs 6000 crore, (iii) 8.24% Government Stock 2033 for a notified amount of Rs 2000 crore and (iv) 8.17% Government Stock 2044 for a notified amount of Rs 3000 crore.

The Reserve Bank of India will conduct 3 day repo variable rate auction for a notified amount of Rs 10,000 crore on January 16, 2015. 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.

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