Bond yields edged higher on Tuesday, as investors remained cautious after retail inflation for October accelerated at a faster-than-expected pace, diminishing chances of interest rate cuts in coming months. Some concern also came with data showing that India's wholesale inflation grew to 3.59 percent during October, higher from 2.6 percent in September, due to increase in prices of food and fuel products.
In the global market, U.S. Treasury two-year note yields hit a fresh nine-year high on Monday, as the yield curve resumed its flattening and investors priced in a 25-basis-point interest rate hike by the Federal Reserve in December. Furthermore, oil markets were treading water, continuing the cautious trading seen over the last week as bullish factors such as ongoing OPEC-led production cuts and Middle East tensions are countered by rising U.S. output.
Back home, the yields on new 10 year Government Stock were trading 8 basis points higher at 7.05% from its previous close of 6.97% on Monday.
The benchmark five-year interest rates were trading 7 basis points higher at 6.88% from its previous close of 6.81% on Monday.