Bond yields edged lower on Tuesday, comforted by the RBI’s buyback announcement aggregating to the worth of Rs 12,000 crore, however, the downside of the yields were limited by caution before election results in the northern state of Uttar Pradesh. The election results, expected by noon (0630 GMT), would give clues on the Congress-led federal coalition's ability to revive stalled reforms.
On the global front, data suggesting the US economy was picking up steam nudged US government bond prices lower on Monday, though recession fears in Europe and slower growth in China kept losses in check. The yield on benchmark 10-year Treasury notes initially edged up to 2.01 percent, from 1.98 percent Friday, but retreated to 2 percent by late afternoon.
Meanwhile, Brent crude slipped towards $123 on Tuesday, reversing earlier gains as investors began a sell-off on worries about demand from slowing economies in China and Europe, though losses were capped by risks to supply from Iran.
The yields on 10-year benchmark 8.79% - 2021 bonds inched lower at 8.22% from its previous close of 8.23% on Monday.
The benchmark five-year interest rate swaps were at 7.36% from Monday's close of 7.38%.
The Reserve Bank of India has announced the auction of 91 and 364-day Government of India Treasury Bills for notified amount of Rs 8,000 crore and Rs 4000 crore respectively. The auction will be conducted on March 7, 2012 using 'Multiple Price Auction' method.
Meanwhile, Ten State Governments announced Auction of State Development Loans 2022 for Rs 11,067.000 crore on March 6, 2012.
Additionally, consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct Open Market Operations by purchasing the following government securities for an aggregate amount of Rs 12,000 crore on March 09, 2012.
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