Bond yields traded higher on Tuesday as investors turned cautious after RBI’s design to kept Repo rate unchanged at 7.25% and CRR at 4% in its Third Bi-monthly Monetary Policy Review, 2015-16. Reasoning its policy stance, the central bank said sustained hardening of inflation excluding food and fuel is most worrisome. Further, the central bank has also said government economic reforms and the timing of any increase in U.S. interest rates would be key factors that will determine whether the central bank cuts rates for a fourth time this year.
In the global market, U.S. benchmark and long-dated Treasury yields hit their lowest levels in over two months on Monday on weak U.S. economic data and a muted inflation outlook, while declines in short-dated yields were limited ahead of a key U.S. jobs report. Furthermore, Oil prices edged up in early Asian trading on Tuesday following a 5 percent fall in the previous session, as high global production and a weakening economic outlook, especially in Asia, prompted analysts to warn of further falls.
Back home, the yields on new 10 year Government Stock were trading 1 basis point higher at 7.82% from its previous close of 7.81% on Monday.
The benchmark five year yields were trading 1 basis point higher at 7.96% from its previous close of 7.95% on Monday
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 August 05, 2015 using 'Multiple Price Auction' method.