Bond yields nudged higher in light volume ahead of October inflation data on Monday as traders awaited details of this week's billion debt sale. The street expectation is that the wholesale price inflation probably slowed only a tad to 9.61% in October from 9.72% the month before, as tighter monetary policy had little effect on high food and energy prices. Meanwhile, central bank deputy governor's comments on possibility of injection of liquidity via open market operations (OMO) when necessary also has limit any upside to yields despite supply concerns.
On the global front, US bond markets were closed on Friday for Veterans Day.
The yields on new 10-year benchmark 8.79% - 2021 bonds 2021 were trading at 8.96% from Friday's close of 8.94%.
While, the benchmark five-year interest rate swaps were trading at 7.37% from 7.36% at Friday's close.
The Reserve Bank of India has announced the auction of 91-day and 364-day Government of India Treasury Bills for notified amount of Rs 4,000 crore and Rs 4000 crore respectively. The auction will be conducted on November 16, 2011 using 'Multiple Price Auction' method.
Post October WPI data:
India's headline inflation was unchanged in October, worse than forecast and above the 9 percent mark for the eleventh straight month, complicating monetary policy for the Reserve Bank of India (RBI). The rate of inflation, based on monthly WPI, came much higher above the street estimates for the month of October 2011 at 9.73%, compared to 9.72% seen in the previous month and 9.08% during the corresponding month of the previous year.
The yields on new 10-year benchmark 8.79% - 2021 bonds 2021 were trading at 8.98% from Friday's close of 8.94%.
While, the benchmark five-year interest rate swaps were trading at 7.38% from 7.36% at Friday's close.
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