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Bond yields edge lower tailing lower crude oil prices

05 Feb 2015 Evaluate

Bond yields ebb tailing lower oil prices, which spurred hopes of inflation remaining low at least for near future. The yields have been edging lower even after Reserve Bank of India (RBI), on much expected lines effected a 25 basis points rate cut outside its monetary policy cycle in Mid-January and left policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75% in its sixth bi-monthly monetary policy review. However, slide of yields is unlikely ahead of the four dated securities auction worth Rs 13, 000 crore.

On the global front, the European Central Bank's surprise move to stop accepting Greek bonds as collateral to raise cash caused a late safe-haven rally in the U.S. Treasuries on Wednesday, erasing initial losses tied to encouraging U.S. and European economic data. Meanwhile, Oil prices rose on Thursday, rallying a little after big losses in the previous session, after China took steps to pour fresh liquidity into the world’s second biggest economy to spur activity.

Back home, the yields on new 10 year Government Stock 2023 were trading 2 basis points lower at 7.70% from its previous close of 7.72% on Wednesday.

The benchmark five-year interest rate swaps were trading 1 basis point lower at 6.98% from its previous close of 6.99% on Wednesday.

The Reserve Bank of India has announced the auction of 364 and 91 days Government of India Treasury Bills for notified amount of Rs 6,000 crore and Rs 8000 crore respectively. The auction will be conducted on February 04, 2015 using 'Multiple Price Auction' method.

The Government of India has announced the sale (re-issue) of four dated securities for Rs 13,000 crore for February 6, 2015, including (i) 8.27% Government Stock 2020 for a notified amount of Rs 2000 crore, (ii) 8.15% Government Stock 2026 for a notified amount of Rs 5000 crore, (iii) 8.24% Government Stock 2033 for a notified amount of Rs 3000 crore and lastly (iv) 8.17% Government Stock 2044 for a notified amount of Rs 3000 crore.

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