Bond yields edged higher on Wednesday as a forecast for the country's first drought in six years and a cautious statement on inflation from the central bank soured sentiment. Besides, investors remained cautious as RBI governor Raghuram Rajan lowered projections of the economic growth as measured by GVA (gross value added) to 7.6% from 7.8% estimated in April due to global factors and likely impact of below normal monsoon.
In the global markets, Treasury prices fell sharply on Tuesday, with yields recording their largest two-day gain since July 2013, as a selloff in eurozone government bonds that followed stronger-than-expected inflation data spilled over into U.S. rates markets. Meanwhile, Oil prices fell in Asia today, reversing steep gains in the previous session as dealers awaited the latest US energy stockpiles report amid concerns about a sustained global supply glut.
Back home, the yields on 10 year Government Stock was trading 2 basis points higher at 7.95% from its previous close of 7.93% on Tuesday. The new 10-year bond yields also 1 basis point higher at 7.73 percent.
The benchmark five year swap rate was trading up 2 basis points at 7.22% from its previous close of 7.20% on Tuesday.
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.