Bond yields edged lower on Tuesday as lower inflation due to normal rainfall after three successive years offered space to the Reserve Bank of India to lower the repo rate further in its upcoming monetary policy meeting.
In the global market, U.S. Treasury yields declined after hitting four-month highs on Monday, as investors sought bargains in bonds whose prices had dropped on Federal Reserve Chair Janet Yellen's remarks last week which suggested that the central bank might tolerate higher inflation. Furthermore, oil prices rose as some analysts said markets might not be quite as over supplied as suggested by many, with global inventories rising less than expected ahead of the high-demand winter heating season in the northern hemisphere.
Back home, the yields on new 10 year Government Stock were trading 3 basis points lower at 6.82% from its previous close of 6.85% on Monday.
The benchmark five-year interest rates were trading 2 basis points lower at 6.72% from its previous close of 6.74% on Monday.