Bond yields edged higher on speculation that weak monsoon going forward will escalate food costs and dissuade the central bank from cutting interest rates. The weather office Tuesday tempered optimism spurred by above-average rain this month, predicting that overall precipitation will fall short in the June-September period as the El Nino phenomenon brings in dry weather.
In the global markets, US Treasuries prices fell for a second straight day on Tuesday on persisting optimism for a Greek debt deal and after comments from a Federal Reserve official supported the view that the central bank could raise interest rates in September. Furthermore, Oil prices rose in early trade on hopes for stronger than expected US crude demand, while doubts over reaching an agreement next week over Iran's nuclear programme eased oversupply concerns.
Back home, the yields on 10 year Government Stock was trading 2 basis points higher at 7.76% from its previous close of 7.74% on Tuesday.
The benchmark five year yields were trading up by 1 basis point at 7.95% from its previous close of 7.94% on Tuesday.
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 24, 2015 using 'Multiple Price Auction' method.