Bonds yields were trading steady on Tuesday as a drop in global crude oil prices supported the sentiment, however, concerns over lined-up debt supplies and a rise in U.S. yields overnight counterbalanced it.
On the global front, with no new economic data to guide them and light activity in the marketplace, U.S. Treasury prices drifted lower on Monday as traders prepared for auctions of $66 billion in notes and bonds starting on Tuesday. Meanwhile, Brent crude fell below $114 a barrel on Tuesday on expectations OPEC may raise its production target this week and lingering concerns that a weak economic outlook will dent demand.
Back home, the Government of India after market hours on Monday announced the sale of three dated securities for Rs. 12,000 crore on June 10, 2011. This auction includes the re-issue) of (i) “7.83% Government Stock 2018” for a notified amount of Rs 3,000 crore (nominal), (ii) “7.80% Government Stock 2021” for a notified amount of Rs 6,000 crore (nominal) and (iii) “8.26% Government Stock 2027” for a notified amount of Rs 3,000 crore (nominal) through price based auctions. The auctions will be conducted using uniform price method.
However, some traders had expected the government would announce floating rate bonds or reduce the auction size in order to help the market tide over likely liquidity tightness due to advance tax outflows due around mid-June.
The yields on 10-year benchmark; the 7.80%-2021 was trading steady at its Monday close of 8.26%.
The benchmark five-year interest rate swaps were tad higher at 7.89% from its previous close of 7.87% on Monday.
Further, the Reserve Bank of India has also announced the auction of 91-day and 182-day Government of India Treasury Bills for notified amount of Rs 8,000 crore and Rs 3,000 respectively. The auction will be conducted on June 8, 2011 using 'Multiple Price Auction' method
Five State Governments has announced Auction of State Development Loans 2021 for Rs 4,525.000 crore on June 7, 2011
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