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Bond yields slide post IIP growth narrows down to 5.8%

12 Jul 2011 Evaluate

Bond yields eased on Monday tracking a slide in the US treasury yields and weaker-than-expected industrial output data. Meanwhile, indicating sluggishness in the Indian economy, industrial growth fell to 5.6 per cent in May this year from 8.5 per cent in the same month last year and 6.3 percent in April. However, April's industrial output growth was revised downwards to 5.8 percent from 6.3 percent.

On the global front, US Treasury prices jumped on Monday as fears of Italy buckling under Europe's debt crisis rattled investors and stoked their appetite for bonds, boosting the chances of strong demand at this week's debt auction.

Back home, the Reserve Bank of India has announced the auction of 91-day and 364-day Government of India Treasury Bills for notified amount of  Rs 7,000 crore and Rs 3000 crore respectively. The auction will be conducted on July 13, 2011 using 'Multiple Price Auction' method.

The Government of India have announced the three dated securities for Rs 12,000 crore on July 15, 2011, which is inclusive of (i) “7.83 percent Government Stock 2018” for a notified amount of Rs 3,000 crore (nominal), (ii) “7.80 percent Government Stock 2021” for a notified amount of Rs 6,000 crore (nominal) and (iii) “8.30 percent Government Stock 2040” for a notified amount of Rs 3,000 crore (nominal) through price based auctions.

The yields on 10-year benchmark 7.80% - 2021 has edged lower by  4 basis points at 8.28% from its previous close of 8.32% on Monday as sentiment lifted by an overnight fall in US bond yields and weaker-than-expected industrial output data. 

The benchmark five-year interest rate swaps were down 9 basis points at 7.56% from its previous close of 7.47% on Monday.

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