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Bond yields gyrate in tight band with positive bias on Monday

31 Oct 2011 Evaluate

Bond yields are trading in tight band with positive bias on Monday as caution ahead of heavy government debt supply was offset slightly by lower oil prices and expectations of an end to the monetary tightening cycle by the central bank. India's central bank raised interest rates on October 25, for the 13th and possibly final time in a tightening cycle that began in early 2010, on expectations that persistently high inflation will finally begin to ease starting December.

On the global front, US Treasuries prices rose on Friday as lower prices and the highest yields in more than 2-1/2 months attracted buyers. Meanwhile, Oil prices fell on Monday, with traders cautious ahead of the Group of 20 leaders' meeting later this week that will focus largely on the European debt crisis.

The yields on 10-year benchmark 7.80% - 2021 bonds 2021 bonds were trading up by at 8.86%, as compared to previous close of 8.84%.

The benchmark five-year interest rate swaps were trading steady at 7.49% from its previous close.

The Reserve Bank of India has announced the auction of 364-day and 91-day Government of India Treasury Bills for notified amount of Rs 4,000 crore each. The auction will be conducted on November 2, 2011 using 'Multiple Price Auction' method.

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