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Bond yields trade lower after RBI unveils another round of OMO

26 Feb 2013 Evaluate

Bond yields were treading lower after RBI unveiled another round of bond purchase to ease the tight cash condition. Further, the yields also edged lower on the back of a global risk-off due to Italy’s parliament deadlock.

Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct Open Market Operations by purchasing the government securities for an aggregate amount of Rs 10,000 crore on March 1, 2013 through multi-security auction using the multiple price method.

On the global front, US Treasury debt prices rose and benchmark yields dipped to the lowest in a month on Monday with safe-haven demand as Italian exit polls reflected uncertainty over whether the country would be able to form a stable government. Meanwhile, Brent crude futures fell by more than a dollar to one-month lows below $114 a barrel on Tuesday as a potential political vacuum in Italy revived worries over instability in the debt-plagued euro zone

Back home, the yields on 10-year 8.79% - 2021 bonds were trading down by 1 basis point at 7.79% from its previous close of 7.80%.

The benchmark five-year interest rate swaps were trading lower by 4 basis points at 7.85% from its previous close of 7.89%.

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