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Bond yields edge lower on OMO hopes

24 Dec 2012 Evaluate

Bond yields were trading lower on hopes of Open Market Operations (OMO). Cash deficit in the banking system, which have stayed above Rs 1 trillion mark since advance tax payments, have raised hopes of more open market operations by the RBI. 

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 150,390 crore via repo window on December 24, 2012, while bank by using LAF facility borrowed Rs 163,225 crore via repo window and parked Rs 50 crore via reverse repo window on December 21, 2012.

On the global front, US Treasuries gained a safety bid on Friday after House of Representatives Speaker John Boehner failed to gain support for a tax plan, hurting stocks on concerns that lawmakers will be unable to reach a deal to avert the fiscal cliff. Meanwhile, Brent crude fell for a third day, staying below $109 a barrel, as uncertainty over the ability of the United States to resolve a budget crisis before a year-end deadline stoked investor concerns about demand growth in the world's top oil user. 

Closer home, the yields on 10-year 8.79% - 2021 were down by 1 basis point to 8.13% from its previous close of 8.14% on Friday.

The benchmark five-year interest rates were trading 1 basis point lower to 7.16% from its previous close of 7.17% on Friday.

The Reserve Bank of India has announced the auction of 364-day Government of India Treasury Bills for notified amount of Rs 5,000 crore each. The auction will be conducted on December 26, 2012 using 'Multiple Price Auction' method.

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