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Bond yields nudge slightly higher on central govt’s buyback hopes

28 Nov 2011 Evaluate

Bond yields have spiraled up in light volume for yet another session in the fresh week on increased likelihood of additional federal borrowing in the current fiscal year after government increasing fears of fiscal deficit slippage, sought parliament approval for net additional spending of Rs 56,850 crore in FY12 on Friday. Additionally, hopes of the central bank announcing more buybacks to ease the pressure on tight liquidity, has weighed on the prices of bonds. However, even improved global risk appetite on hopes that Europe will be able to ease funding costs also added to the upwards pressure.

Some cautiousness also prevails to linger ahead of the GDP data. The street expectation is that Indian economy will probably grew an annual 6.9% in the quarter through September, at its weakest pace in more than two years.

The yields on 10-year benchmark 8.79% - 2021 bonds 2021 bonds were trading tad higher at 8.82% from its previous close of 8.81%.

The benchmark five-year interest rate swaps were trading higher at 7.36% from 7.34% on Friday.

The Reserve Bank of India has announced the auction of 91-day and 364-day Government of India Treasury Bills for notified amount of Rs 4,000 crore each. The auction will be conducted on November 30, 2011 using 'Multiple Price Auction' method.

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