Bond yields continued its losing momentum, as the demand for safe haven bonds surged after RBI resuming bond purchases after a two-week absence, announced Rs 12,000 crore worth bond buy back this week.
On the global front, benchmark US Treasury yields rose sharply as investors dumped safe-haven assets after euro zone finance ministers agreed to prop up Spain's debt-laden banks, alleviating much of the fear of debt contagion from that country. Meanwhile, Brent crude futures rose more than $2 on Monday as a rescue package for Spain's banks revived hopes of steady oil demand growth, while a failure in nuclear talks between the United Nations and Iran ignited concern over supply disruption.
Back home, the yields on 10-year benchmark 8.79% - 2021 bonds fell 3 basis points to 8.32% from Friday's close of 8.35%.
The benchmark five-year interest rate swaps rose 2 basis points to 7.25% from its previous close of 7.23%.
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 government securities for an aggregate amount of Rs 12,000 crore on June 12, 2012 through multi-security auction using the multiple price method.
The Reserve Bank of India has announced the auction of 364-day and 91-day Government of India Treasury Bills for notified amount of Rs 5,000 crore and Rs 10,000 crore respectively. The auction will be conducted on June 13, 2012 using 'Multiple Price Auction' method.