Bond yields edged lower on Thursday, on sustained demand from corporates and banks. Some support also came with report that the Centre has contained its fiscal deficit for FY18 at 3.42% of gross domestic product (GDP), down from 3.5% estimated (RE) when Budget FY19 was presented on February 1. An Rs 85,000 crore (3.8%) reduction in expenditure from the RE level of Rs 22.18 lakh crore and a marginal upward revision in nominal GDP in the second advance estimate (the Budget relied on the first advance estimate) allowed the government to curb the deficit.
In the global market, U.S. Treasury yields rose on Wednesday as the 10-year yield reached seven-year highs and tested key technical support at 3.10 percent, which may touch off another wave of bond sales if it rises much further above that level. Furthermore, Oil prices firmed, with Brent crude creeping ever closer to $80 per barrel, a level it has not seen since November 2014, as supplies tighten while demand remains strong.
Back home, the yields on new 10 year Government Stock were trading 1 basis point lower at 7.89% from its previous close of 7.90% on Wednesday.
The benchmark five-year interest rates were trading 1 basis point lower at 7.88% from its previous close of 7.89% on Wednesday.