Bond yields edged tad higher tailing overnight surge of US treasury yields. Additionally, uncertainty over when Reserve Bank of India would ease rates also weighed on the sentiment. The yields fell in previous trading session after the government set a higher-than-expected fiscal deficit target for the 2015/16 year as part of the federal budget unveiled on Saturday.
On the global front, U.S. Treasury yields rose on Monday as large sales of corporate debt pressured prices and as investors continued to question whether the Federal Reserve is likely to raise interest rates in the coming months. Meanwhile, Brent crude oil prices steadied above $60 a barrel in early Asian trading on Tuesday, supported by traders entering the market after prices dropped sharply in the previous session on the back of record U.S. stocks.
Back home, the yields on new 10 year Government Stock 2023 were trading 3 basis points higher at 7.77% from its previous close of 7.74% on Monday.
The benchmark five-year interest rate swaps were trading 1 basis point higher at 7.06% from its previous close of 7.05% on Monday.
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.
The Reserve Bank of India will conduct 2 day variable rate reverse repo auction for a notified amount of Rs 40,000 crore on March 3, 2015, Tuesday. The auction will be conducted between 12.00 pm and 12.30 pm as per the revised guidelines on Term Repo Auctions issued on February 13, 2014.