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Bond yields edge higher in the absence of follow-on buying

23 Jul 2013 Evaluate

Bond yields edged higher in the absence of follow-on buying from banks after the initial fall in yields on the back of the gold import measures announced by the central bank. In yet another step to contain the current account deficit, the Reserve Bank of India on Monday imposed restrictions on gold imports by banks and other authorised agencies. As per the new norms, all banks and authorised agencies will have to ensure that at least 20 per cent of the imported gold is made available for exports and a similar amount is retained with the customs. Meanwhile, trading bands were relaxed for Tuesday by FIMMDA.

On the global front, U.S. Treasuries were steady on Monday ahead of this week's sales of $99 billion in new intermediate-dated debt, with little fresh data on tap to give clues over the timing of when the Federal Reserve is likely to pare back its bond-purchase program. Meanwhile, brent crude futures hovered above $108 on Tuesday, buoyed by a weaker dollar as investors waited on U.S. crude inventory data for further clues on the outlook for demand in the world's largest oil consumer.

Back home, the yields on 10-year 7.16% - 2023 bonds were trading 2 basis points higher at 8.11% from its previous close of 8.09%.

The benchmark five-year interest rate swaps were trading 1 basis point lower at 8.09% from its previous close of 8.10% on Monday.

Meanwhile, the Reserve Bank of India has announced the auction of 364 and 91-days Government of India Treasury Bills for notified amount of Rs 5,000 crore and Rs 7000 crore respectively. The auction will be conducted on July 24, 2013 using 'Multiple Price Auction' method.

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