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Bond yields tread water in absence of fresh cues

22 Aug 2012 Evaluate

Bond yields were treading water in thin volume trade in absence of fresh cues, with steadiness of Brent crude prices, also weighing on the sentiment. Meanwhile, trading was hit as bank employees began a two-day strike protesting against proposed reforms that would ease mergers and allow more private capital, including foreign investment, in the banking sector.

On the global front, US 10-year Treasuries yield slipped from a three-month high, as traders unwound bearish bets after the securities found support at a key chart level the previous day. Meanwhile, 10-year yield had hit a three-month high in the previous session due to renewed speculation that the European Central Bank will eventually take action to stem rises in Spanish and Italian borrowing costs and ease the euro zone's debt crisis. Meanwhile, Brent crude steadied near $115 a barrel on Wednesday, supported by hopes that European policymakers will act to resolve the onerous debt crisis.

The yields on 10-year benchmark 8.79% - 2021 were trading flat at its previous close of 8.25%.

The benchmark five-year interest rates fell 1 basis point at 7.18% from its previous close of 7.19% on Tuesday.

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 7,000 crore respectively, to be conducted on August 22, 2012 using 'Multiple Price Auction' method.

The Government of India have announced the sale (re-issue) of four dated securities for Rs 15,000 crore on August 24, 2012, which include (i) ‘8.07 percent Government Stock 2017-JUL’ for a notified amount of  Rs 4,000 crore (nominal) through price  based auction;  (ii) ‘8.15 percent Government Stock 2022’ for a notified amount of  Rs 6,000 crore (nominal) through price based auction;  (iii) ‘8.97 percent Government Stock 2030’ for a notified amount of  Rs 3,000 crore (nominal) through price based auction; and (iv) ‘8.33 percent Government Stock 2036’ for a notified amount of  Rs 2,000 crore (nominal) through price based auction. The auctions will be conducted using uniform price method. The auctions will be conducted by the Reserve Bank of India, Mumbai Office, Fort and Mumbai on August 24, 2012 (Friday).

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