Bond yields dropped on Monday, taking cues from lower global crude oil prices and US Treasury yields. Further, some bond dealers are waiting to see whether the RBI will announce an open market operation to buy debt during the week after the central bank's assurance on liquidity. Meanwhile, the RBI will release its June-quarter current account deficit data after the market hours. The deficit, which hit a record high in the last fiscal year, is likely to rise in the June quarter from the previous 3 month period before easing due to a sharp fall in gold imports and improving exports.
On the global front, U.S. Treasury prices rose on Friday, driven by safe-haven demand on concerns about the implications of a possible U.S. government shutdown. Meanwhile, brent crude slipped below $108 a barrel on Monday and was on track for its first monthly drop in four months, as tensions over Iran eased and as a potential U.S. government shutdown clouded the outlook for demand.
Back home, the yields on 10-year 7.16% - 2023 bonds, were trading 2 basis points lower at 8.69% from its previous close of 8.71% on Friday.
The benchmark five-year interest rate swaps were trading 1 basis point higher at 8.37% from its previous close of 8.36% on Friday.
The Reserve Bank of India has announced the auction of 91-days Government of India Treasury Bills for notified amount of Rs 6,000 crore. The auction will be conducted on October 1, 2013 using 'Multiple Price Auction' method. The allocation to the non-competitive bidders will be outside the notified amount at the discretion of the Bank. The sale will be subject to the terms and conditions specified in the General Notification No. F.2 (12)-W & M/97 dated 31st March, 1998 issued by Government of India and as amended from time to time.
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