Bond yields traded lower on Friday so far in July, on optimism a drop in oil and an improvement in the monsoon will slow inflation and give the central bank room to keep interest rates unchanged next week. However, sentiment remained brittle because India has yet to announce a much-anticipated increase in limits for foreign investors, while the Reserve Bank of India is aggressively draining liquidity.
In the global market, U.S. Treasuries prices were mixed on Thursday and the yield curve turned flatter following strong U.S. economic growth data that led to gains for longer-dated debt and stable short-end prices as expectations of a September U.S. rate rise heightened. Furthermore, Oil prices fell in Asian trade on Friday as concern over global oversupply intensified after the head of oil producers' cartel OPEC indicated there would be no cut-back in production, although a fall in the U.S. dollar put a floor under prices.
Back home, the yields on new 10 year Government Stock were trading 2 basis points lower at 7.80% from its previous close of 7.82% on Thursday.
The benchmark five year yields were trading 2 basis points lower at 7.93% from its previous close of 7.95% on Thursday