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Bond yields edge higher in absence of OMO announcement by RBI

22 May 2013 Evaluate


Bond yields after hitting December 2009 lows in previous session have now edged higher on Wednesday, in absence of any open market operation announcement (OMO’s) by the central bank this week. Nevertheless, fall in global crude oil prices and expectations of another rate cut in the June 17 policy review are curbing the further uptrend of bond yields.

On the global front, US Treasuries ended stronger on Tuesday after buyers stepped back in, and after two voting members of the US Federal Reserve struck a dovish tone on the economy, cutting back expectations that the US central bank is close to tapering its bond purchases. Meanwhile, brent futures pulled further below $104 per barrel on Wednesday on concerns that peak summer demand in the world’s top oil consumer may falter after data showing a stronger-than-expected rise in US oil stockpiles.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading 1 basis point higher at 7.36% from its previous close of 7.35% on Tuesday.

The benchmark five-year interest rate swaps were trading 2 basis points higher at 6.76% from its previous close of 6.74% on Tuesday.

The Reserve Bank of India has announced the auction of 91 and 182 days Government of India Treasury Bills for notified amount of Rs 5,000 crore each. The auction will be conducted on May 22, 2013 using 'Multiple Price Auction' method.

The Government of India have announced the sale (re-issue) of four dated securities for  Rs 15,000 crore on May 24, 2013  (i) “8.12 percent Government Stock 2020” for a notified amount of  Rs 3,000 crore (nominal) through price based auction; (ii) “8.20 percent Government Stock 2025” for a notified amount of Rs 6,000 crore (nominal) through price based auction;(iii) “8.32 percent Government Stock 2032” for a notified amount of  Rs 3,000 crore (nominal) through price based auction, and (iv) “8.30 percent Government Stock 2042” for a notified amount of Rs 3,000 crore (nominal) through price based auction. The auctions will be conducted using multiple price method. The auctions will be conducted by the Reserve Bank of India, Fort, Mumbai on May 24, 2013 (Friday).

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