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Bond yields bounce off day’s low on profit-booking

09 Apr 2015 Evaluate

Bond yields bounced off days’ low on incremental profit-booking activities. The yields slipped substantially in early deals after Moody’s Investors Service, expressing optimism in the efforts of the new government and the Reserve Bank of India, has raised the rating outlook of the country to positive.The rating agency has said that India has grown faster than similarly rated peers over the last decade due to favourable demographics, economic diversity, as well as high savings and investment rates. Moody’s expects these structural advantages, supported by relatively benign global commodity prices and liquidity conditions, will keep India's growth higher than that of its peers over the rating horizon.

On the global front, US short term treasury yields climbed to one week peaks on Wednesday after minutes from the last Federal Reserve meeting suggested that US central bank could still raise interest rates this year despite evidence of slower economic growth. The Fed minutes were in line with comments earlier on Wednesday by two U.S. central bank officials who did not rule out a rate increase in June if U.S. economic numbers strengthen. Meanwhile, oil prices rose more than a percent on Thursday, clawing back a part of 6% slump in the previous session that was triggered by a shock jump in US crude inventories and record Saudi output.

Back home, the yields on 10 year Government Stock was trading 1 basis point lower at 7.78% from its previous close of 7.79% on Wednesday.

The benchmark five year swap rate was trading 1 basis point lower at 7.09% from its previous close of 7.10% on Wednesday.

The Government of India have announced the sale (re-issue) of the Government Stock through auctions to be held on April 10, 2015 for for amount of  16,000 crore, including (i) 8.27 per cent GS 2020 for a notified amount of Rs 3000 crore, (ii) 8.15 per cent GS 2026 for a notified amount of Rs 7000 crore, (iii) 8.24 per cent GS 2033 for a notified amount of Rs 3000 crore and lastly (iv) 8.17 per cent GS 2044 for a notified amount of Rs 3000 crore respectively.

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