Bond yields eased further on Friday tailing the appreciation of Indian currency to two months high level on the back of dollar weakness against basket of major currencies on speculations of potential damage to the US economy from the weeks-long government shutdown discouraging the Federal Reserve from scaling back its stimulus programme at least until the beginning of next year. However, sharp gains in domestic bond prices were limited amid anticipation of a rate hike by the central bank at its policy review at the end of this month. Nevertheless, the hopes that RBI in its upcoming momentary policy would raise the cap of banks borrowing from repo window, currently up-to 0.25% of NDT, also strengthened bond prices, thereby weighing on the yields.
On the global front, 10-year Treasury yield was little changed in Asia trade on Friday after sliding 14 basis points in the previous two days to the lowest level in 10 weeks amid speculation the Fed will delay cutting back on stimulus. Meanwhile, brent futures rose on Friday, holding above $109 a barrel as data showing China's economy grew in the third quarter at the fastest pace this year helped offset concerns about demand for oil after a rise in crude stockpiles in the United States.
Back home, the yields on 10-year 7.16% - 2023 bonds, were trading lower by 2 basis points at 8.58% from its previous close of 8.60% on Thursday.
The benchmark five-year interest rate swaps were trading 3 basis points lower at 8.43% from the previous close of 8.46% on Thursday.
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).
