Bond yields edged higher as dealers preferred to stay on the sidelines ahead of the US federal Reserve’s policy statement due later in the day that is expected to give direction on interest rates. The Federal Reserve on Wednesday is expected to lay the groundwork for its first interest rate hike in nearly a decade, as it continues to weigh whether the U.S. recovery can hold up against collapsing oil prices and a soaring dollar.
On the global front, U.S. intermediate- and long-dated Treasury yields hit their lowest in over two weeks on Tuesday after further declines in oil prices underscored mild inflation, while weak U.S. economic data pointed to a more dovish Federal Reserve. Meanwhile, Brent crude fell towards $53 a barrel on Wednesday as U.S. crude stocks were forecast to have surged for the tenth straight week to a new record high, fuelling supply concerns of a global oil glut, although a weaker dollar kept a floor under prices.
Back home, the yields on new 10 year Government Stock 2023 was trading 1 basis point higher at 7.79% from its previous close of 7.80% on Tuesday.
The benchmark five-year interest rate swaps was trading 1 basis point lower at 7.10% from its previous close of 7.11% on Tuesday.
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 crore and Rs 8,000 crore respectively. The auction will be conducted on March 18, 2015 using 'Multiple Price Auction' method.
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