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Bond yields tread water ahead of ECB’s policy decision

22 Jan 2015 Evaluate

Bond yields were treading water on account of prevailing caution ahead of ECB policy decision, with participants eagerly watching out the size and scope of a bond-buying program, which would be unveiled by European Central Bank later in the day  as it attempts to revive the flagging euro zone economy. Reports suggest that ECB's Executive Board has proposed a quantitative easing (QE) program that would enable the bank to buy 50 billion euros ($58 billion) in bonds a month from March

On the global front, U.S. Treasury yields rose on Wednesday as investors unwound positions on reports that European Central Bank has proposed 50 billion euros ($58 billion) worth of monthly bond purchases, and after the Bank of Canada made a surprise interest rate cut. Meanwhile, Brent crude oil dipped towards $48 a barrel on Thursday ahead of an expected decision by the European Central Bank (ECB) to start buying bonds, a move which could push the dollar to new highs and put downward pressure on commodities.

Back home, the yields on new 10 year Government Stock 2023 was trading steady from Wednesday’s close of 7.69%.

The benchmark five-year interest rate swaps were trading flat at Wednesday’s close of 6.86%.

The Reserve Bank of India will conduct overnight repo variable rate auction for a notified amount of Rs 10,000 crore on January 22, 2015, Thursday. 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.

The Government of India have announced the sale (re-issue) of the Government Stock through auctions to be held on January 23, 2015, including (i) 8.27 per cent GS 2020 for a notified amount of Rs 2000 crore, (ii) 8.60 per cent GS 2028 for a notified amount of Rs 6000 crore, (iii) 8.24 per cent GS 2033for 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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