Bond yields edged higher after rupee plunged to new record low and on concerns that liquidity tightening steps by Reserve Bank will continue for some more time. The 10-year government bond yield shot up to 9.48 per cent today, the highest 5 years as the rupee breached the psychological level of 64-mark. Meanwhile, the Reserve Bank will be selling Rs 22,000 crore of cash management bills, Rs 15,000 crore of government bonds, Rs 12,000 crore worth of T-bills this week.
On the global front, U.S. Treasury yields rose to two-year highs on Monday, extending weakness after their worst week in two months, as investors worried about the effect on the market if the Federal Reserve reduces its bond purchase program next month. Meanwhile, brent crude prices slipped towards $109 a barrel on uncertainty over when the U.S. Federal Reserve will scale back its commodities-friendly bond-buying programme, but unrest in Egypt and reduced Libyan oil product supply helped curtail the losses.
Back home, the yields on 10-year 7.16% - 2023 bonds were trading 3 basis points higher at 9.26%, from its previous close of 9.23% on Monday.
The benchmark five-year interest rate swaps were trading 3 basis points higher at 9.22% from its previous close of 9.19% on Monday.
The Reserve Bank of India has announced the auction of 364-days 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 August 21, 2013 using 'Multiple Price Auction' method.
