Bond yields eased after U.S. Congress approved an 11th-hour deal to end a fiscal standoff and avoid a damaging default on government debt. However, further softening of yields is not expected on account of prevailing risk of another round of rate hike in RBI’s quarterly monetary policy review on October 29.
On the global front, Yields on U.S. Treasury bills due in February were steady in Asian trade on Thursday, reflecting market unease that an 11th hour deal to break a U.S. fiscal impasse had merely pushed back the prospect of another bruising fight in Washington. Meanwhile, brent futures were steady above $110 a barrel on Thursday, with investors reluctant to lock in fresh positions ahead of a deluge of data expected in the wake of Washington's deal to end a partial government shutdown and dodge a debt default.
Back home, the yields on 10-year 7.16% - 2023 bonds, were trading lower by 6 basis points at 8.60% from its previous close of 8.66% on Tuesday.
The benchmark five-year interest rate swaps were trading 3 basis points lower at 8.18% from the previous close of 8.21% on Tuesday.
The Government of India has announced the sale (re-issue) of four dated securities for Rs 15,000 crore on October 18, 2013, including (i) “7.28 percent Government Stock 2019” for a notified amount of Rs 4,000 crore (nominal) through price based auction; (ii) “7.16 percent Government Stock 2023” for a notified amount of Rs 7,000 crore (nominal) through price based auction;(iii) “8.32 percent Government Stock 2032” for a notified amount of Rs 2,000 crore (nominal) through price based auction, and (iv) “8.30 percent Government Stock 2042” for a notified amount of Rs 2,000 crore (nominal) through price based auction. The auctions will be conducted using uniform price method. The auctions will be conducted by the Reserve Bank of India, Fort, Mumbai on October 18, 2013 (Friday).
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