Safe haven bond surged, pushing the yield to the lowest level in more than week, as falling oil prices eased concern of inflation. However the gains of safe haven treasuries may be limited as most traders have kept away from the currently trading illiquid papers in anticipation of announcement of new benchmark and ahead of auction announcement later in the day.
On the global front, US Treasury prices gained in Asia on Monday, as the outcome of elections in Greece and France raised concerns about the progress of European austerity steps and fueled a rally ignited by downbeat US employment data. Greek voters rejected pro-bailout policies, putting the country's future in the euro zone at risk and threatening to revive Europe's debt crisis, while Socialist Francois Hollande won a presidential election in France and promised to start a pushback against austerity policies.
Meanwhile, Brent crude fell below $113 a barrel on Monday, striking its lowest level since late January, on growing worries about global energy demand after weak US jobs data and European elections that could threaten efforts to fix the euro zone debt crisis.
Back home, the yields on 10-year benchmark 8.79% - 2021 bonds were trading 2 basis points lower to 8.60% from its previous close of 8.62% on Thursday. Benchmark 10 year bond yields will not be trading on Friday because of the regular 'shut period' ahead of Saturday's coupon payment.
The benchmark five-year interest rate swaps were trading 6 basis points lower at 7.54% from its previous close of 7.60% on Friday.
The Reserve Bank of India has announced the auction of 91 and 182-day Government of India Treasury Bills for notified amount of Rs 9,000 crore and Rs 5000 crore respectively. The auction will be conducted on May 9, 2012 using 'Multiple Price Auction' method.
Five State Governments have announced auction of State Development Loans 2022 for Rs 5150.00 crore on May 8, 2012.
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