Bond yields edged lower on Monday, amid India Ratings in its latest report has said banks are unlikely to take a big hit on profitability this quarter due to rising bond yields, which may eat up 5.3 per cent (Rs 11,790 crore) of their net income in the worst-case scenario. It stated in the worst-case scenario, banks may see a profit erosion of 2.6 per cent of their pre-provisioning operating profit and 5.3 per cent of their post-tax profit from treasury losses in Q1.
In the global market, the U.S. 10-year Treasury note yield was on track to end the week near its lowest since late May after weak data on Friday added to worries about the global economy and traders reassessed the Federal Reserve's ability to raise rates much further. Furthermore, oil fell, reversing earlier gains but continuing a recent losing streak, on concerns that an expected increase in interest rates in the U.S., the world's biggest oil user, may limit fuel demand growth.
Back home, the yields on new 10 year Government Stock were trading 4 basis points lower at 7.37% from its previous close of 7.41% on Friday.
The benchmark five-year interest rates were trading flat with its previous close of 7.14% on Friday.