Bond yields were trading steady at its previous close of 7.82%, as the rate cuts hope by RBI was dampened after retail inflation surged to eight-month high of 5.4 per cent in June, compared to 5.01 percent in May and 6.77 percent in June last year. Further, the surplus seen in the monsoon rains last month turned a deficit in July; reigniting concern a reduction in crop output will stoke food costs. However, the easing of Wholesale Price Index (WPI) for the month of June has provided some relief to the bond investors. The WPI fell to (-) 2.4% in June, continuing its deflationary mode, led by downward fuel prices and lower commodity prices.
In the global markets, U.S. Treasury yields fell on Tuesday after data showed U.S. retail sales unexpectedly fell in June, adding to speculation that tepid economic data may lead the Federal Reserve to wait longer before raising interest rates. Furthermore, Oil prices rose in early trade as traders expect a delay in Iranian crude supplies returning to the market after Tehran and six world powers reached a nuclear compromise, but analysts said prices would still remain low due to oversupply.
Back home, the yields on new 10 year Government Stock were trading steady at its previous close of 7.82%. Moreover, the benchmark five year yields were also trading steady at its previous close of 8%.
RBI has announced the auction of 182-day Government of India Treasury Bills for notified amount of Rs 6,000 crore. The auction will be conducted on July 15, 2015 using 'Multiple Price Auction' method.