Bond yields edged higher after Reserve Bank of India (RBI) cut interest rates for a third time this year, taking advantage of subdued inflation to give more support to an economy that many economists doubt is doing as well as latest impressive growth numbers suggest. Though, the central bank announced a rate cut but it cautioned that Inflation is expected to rise to 6% by January 2016 and said that strong food policy management is important to keep inflation and inflationary expectations under check in near term.
In the global markets, US Treasury debt yields rose to one-week highs on Monday after data showed US manufacturing activity rebounded in May and construction spending improved, suggesting the world's largest economy was on a more steady path to recovery after a soft patch in the first quarter. Meanwhile, Crude oil prices rose on Tuesday due to firm demand after dipping in earlier trade on expectations that OPEC would not cut output at its meeting this week.
Back home, the yields on 10 year Government Stock was trading 1 basis point higher at 7.83% from its previous close of 7.82% on Monday. The new 10-year bond yields also 1 basis point higher at 7.65 percent.
The benchmark five-year swap rate unchanged at 7.10 percent while the one-year rate steady at 7.47 %.
The Reserve Bank of India has announced the auction of 91-days and 182-days Government of India Treasury Bills for notified amount of Rs 9,000 crore and Rs 6000 crore respectively. The auction will be conducted on June 03, 2015 using 'Multiple Price Auction' method.
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