Bond yields edged lower after weak data from U.S reinforced expectations of a delayed tapering in U.S. monetary stimulus and bolstered appetite for other risky asset classes. Further, yields also lost ground after HSBC India Services PMI data suggested that Reserve Bank of India would have to keep up its inflation guards up to address the lingering inflation pressures. After slumping to over four-year low level in September, the activity in services sector, which makes up of nearly 60% of country’s economic output, although rose from 46.1 to 47.5 in October, it posted below the 50.0 no-change mark for the fourth successive month in October, indicating a further contraction.
On the global front, U.S. Treasury debt prices rose modestly on Monday, retracing some recent losses and hemming yields within recent ranges as investors looked ahead to key data later in the week as well as information on upcoming Treasury debt sales. Meanwhile, brent futures on Tuesday traded near a four-month low touched overnight, but worries over a prolonged outage from oil exporter Libya helped the benchmark hold above $106 a barrel
Back home, the yields on 10-year 7.16% - 2023 bonds, were trading 3 basis points lower at 8.67% from its previous close of 8.70% on Friday.
The benchmark five-year interest rate swaps were trading unchanged at its previous close of 8.21% on Friday.
The Reserve Bank of India has announced the auction of 91 and 182 days Government of India Treasury Bills for notified amount of Rs 6,000 crore respectively.
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