Bond yields edged lower on Wednesday on the back of favorable macroeconomic data. The growth in production in the eight key infrastructure sectors hit a six-month high of 4.4% in May, after two consecutive months of decline, indicating a recovery in industrial activity. The market is also seeing fresh demand from public-sector banks at the beginning of a new quarter, helping push down yields.
Besides, above expectation monsoons in the June with a rainfall of 189.5 millimetres as against a normal of around 163.6 millimetres and a further decline in the crude oil prices has buoyed the trading sentiments. Ten-year bonds slumped last month as the prospect of inadequate monsoon rains in India clouded the outlook for inflation and interest rates.
In the global markets, US Treasuries yields rose on Tuesday, closing a rough quarter, as hopes of a last-minute deal between Greece and its creditors that would keep the cash-strapped nation from leaving the euro zone pared the safe-haven demand for U.S. government debt. Furthermore, Oil prices fell on Wednesday after Greece became the first developed economy to default on a loan with the International Monetary Fund and as both U.S. and OPEC production hit new records.
Back home, the yields on 10 year Government Stock was trading 3 basis points lower at 7.83% from its previous close of 7.86% on Tuesday.
The benchmark five year yields were trading down by 2 basis points at 8.04% from its previous close of 8.06% 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 8,000 crore and Rs 6,000 crore respectively. The auction will be conducted on July 02, 2015 using 'Multiple Price Auction' method.