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Bonds yields edge higher on good global cues

11 Sep 2013 Evaluate

Bond yields edged higher on the back of easing concerns over a possible US-led military action in Syria and drop in global oil prices. While, some dealers were awaiting July factory data as well as wholesale and CPI inflation data for August before monetary policy review next week. Meanwhile, some Tax free corporate bonds paying return equivalent to 13% are helping to attract investors back.

On the currency front, Indian rupee continued its upward rally for the fifth straight day as easing geopolitical tensions in Syria led to cooling of global crude oil prices and in turn eased the concern of rise in CAD. Additionally, the Reserve Bank of India late on Tuesday said that banks can borrow from overseas market up to 100% of their unimpaired Tier I capital.

On the global front, US Treasuries yields climbed on Tuesday as upbeat Chinese industrial output and retail sales data eased fears of an economic slowdown, while ebbing concerns about a Western-led attack on Syria further reducing demand for safe-haven US debt. Meanwhile, brent crude oil futures gained ground above $111 a barrel on Wednesday, after falling more than 4 percent in the past two days as fears eased of an imminent strike against Syria. US President Barack Obama vowed on Tuesday to explore an initiative from Russia to neutralize Syria's chemical weapons, but he voiced scepticism about it and still sought support for his threat to use military force should diplomacy fail.

Back home, the yields on 10-year 7.16% - 2023 bonds, were trading 2 basis points higher at 8.49% from its previous close of 8.47% on Tuesday.

The benchmark five-year interest rate swaps were trading 6 basis points higher at 8.33% from its previous close of 8.27% 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 7,000 crore and Rs 5,000 crore respectively, which will be conducted on September 11, 2013.

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