Bond yields edged lower on expectation that fall in oil prices coupled with progress of the monsoon will help inflation to stay below RBI's target and hope of another rate cut by central bank at its upcoming monetary policy review scheduled for August 4, 2015. However, gains remained capped as central bank's unexpected bond sale last week has fuelled expectations that the market will be hit by more sales in coming weeks.
In the global markets, U.S. Treasuries prices rose on Tuesday after weak corporate results hurt U.S. stocks and fueled demand for safe-haven U.S. government debt, while expectations that the Federal Reserve could hike rates in September capped gains. Furthermore, Oil prices fell in early Asian trade on Wednesday, after industry data showed U.S. crude inventories rose last week, even as the dollar fell from a three-month high.
Back home, the yields on 10 year Government Stock was trading 1 basis point lower at 7.82% from its previous close of 7.83% on Tuesday.
The benchmark five year yields were trading 2 basis points lower at 8.00% from its previous close of 8.02% 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 8,000 crore and Rs 6,000 crore respectively. The auction will be conducted on July 22, 2015 using 'Multiple Price Auction' method.