Bond yields edged lower on Monday owing to value buying by investors in anticipation of one more rate cut later in the financial year. Last week, RBI had cut the repo rate by 25 basis points (bps) to 7.25 per cent but the market interpreted the guidance as hawkish, due to which yields rose. The fall in yields might continue but the scope for further decline is limited, as the next rate cut by RBI is expected after some months. Meanwhile, some investors remained on the sidelines ahead of a host of macroeconomic numbers such as IIP and inflation data, to be released this week.
In the global markets, US Treasurys tumbled Friday, pushing up yields, after a stronger-than-expected May jobs report reinforced expectations the Federal Reserve will deliver its first rate hike in nearly a decade later this year. Meanwhile, Oil prices fell in Asian trade after China's fuel imports dropped sharply and as markets digested an OPEC decision to keep its production target unchanged, a move which would keep the market oversupplied for the rest of the year.
Back home, the yields on 10 year Government Stock was trading 18 basis points lower at 7.80% from its previous close of 7.98% on Friday.
The benchmark five year yields were trading up by 1 basis point at 8.02% from its previous close of 8.01% on Friday.
The Reserve Bank of India has announced the auction of 91-days and 364-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 10, 2015 using 'Multiple Price Auction' method.