Bond yields were trading range bound ahead of crucial inflation data on Sept 14, the last macro print before central bank's upcoming mid-quarter monetary policy review on September 17, 2012. Dealers are still hopeful for a rate cut as early as next week's policy review, if inflation surprises on the downside or if government announces fiscal consolidation steps. However, WPI is expected to have accelerated 6.95 percent against July's inflation figure of 6.87 percent.
On the global front, US Treasuries prices fell on Wednesday, with longer-dated yields touching three week’s high after Germany's top court backed the euro zone's new bailout fund, reducing demand for safe-haven US bonds. Meanwhile, Brent crude, after rising for five straight sessions, steadied near $116 a barrel on Thursday, as traders awaited a US Federal Reserve policy decision that is expected to include further stimulus action for bolstering the world's largest economy.
The yields on 10-year benchmark 8.79% - 2021 edged 1 basis point lower at 8.19% from its previous close of 8.20% on Wednesday.
The benchmark five-year interest rates were trading higher by 4 basis points at 7.19% from its previous close of 7.15% on Wednesday.
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