Bond yields edged tad higher after government set higher than expected fiscal deficit target for 2015-16 as part of federal budget unveiled on Saturday. The budget announced fiscal deficit target of 3.9% of gross domestic product for the fiscal year starting in April, higher than expected 3.6%. Also the government stated that it would be reducing deficit to 3% of GDP by 2017/18 fiscal year, which is a year later than expected.
On the global front, U.S. Treasuries prices fell on Thursday after an increase in core U.S. consumer prices in January pointed to marginally less dovish Federal Reserve policy and as an auction of seven-year notes met with soft demand. Meanwhile, brent and US crude futures fell to near six year lows, down 60% since June, a blow from oil exporters Russia, Saudi Arabia and Malaysia.
Back home, the yields on new 10 year Government Stock 2023 were trading 1 basis point lower at 7.73% from its previous close of 7.72% on Friday.
The benchmark five-year interest rate swaps were trading 2 basis points higher at 6.99% from its previous close of 7.01% on Friday.
The Reserve Bank of India has announced the auction of 364 and 91 day Government of India Treasury Bills for notified amount of Rs 6,000 and Rs 8000 crore respectively. The auction will be conducted on March 04, 2015 using 'Multiple Price Auction' method.
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