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Bond yields edge higher on RBI’s inflation comments

11 Feb 2013 Evaluate

Bond yields were trading higher by one basis point after Reserve Bank of India’s (RBI) governor said that inflation still remains high. Further, crude oil hitting a nine-month high on February 8 also supported the upsurge. However, traders will be watching the factory output data on Feb 12 and the inflation data on Feb 14 for near-term direction. Moreover, bonds will remain supported on talk of auction postponement, FII debt limit auctions next week and OMO hopes.

On the global front, US Treasuries ended almost flat on Friday after dipping during the session when stocks resumed their climb and traders got ready for $72 billion in new government debt supply next week. Meanwhile, Brent oil futures hit a nine-month high near $119 a barrel on Friday after data showed strong growth in Chinese oil imports, rounding out four straight weeks of gains for the contract and taking its premium over US crude to more than $23.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading higher by 1 basis point at 7.85% from its previous close.

The benchmark five-year interest rate swaps were trading flat at 7.23% from its previous close.

The Reserve Bank of India has announced the auction of 182-day and 91-day Government of India Treasury Bills for notified amount of Rs 5,000 crore. The auction will be conducted on February 13, 2013 using ‘Multiple Price Auction’ method.

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