Bond yields edged lower on Friday after the central bank underscored that it would give additional 100 billion rupees of cash via seven-day repo on Friday. However, further uptick of bond prices was restricted on account of prevailing caution ahead of factory output later in the session and also ahead of inflation data next week, which would provide clues on RBI’s stance in its upcoming monetary policy review on January 28, 2014. Street expects industrial output to return to modest growth in November after shrinking for the first time in four months in October, helped by better overseas demand. Meanwhile, bit of caution is also witnessed ahead of Rs 15,000 crore debt sale auction.
On the global front, U.S. Treasury prices rose on Thursday as a $13 billion auction of 30-year bonds drew solid investor demand, even as the recent wave of upbeat economic data have signaled bond yields might climb higher. Meanwhile, brent crude rose towards $107 a barrel on Friday amid worries about supply from North Africa, although speculation that strong U.S. data could prompt the Federal Reserve to further taper its stimulus capped gains.
Back home, the yields on new 10 year Government Stock 2023 were trading 2 basis points lower at 8.77% from its previous close of 8.79% on Thursday.
The benchmark five-year interest rate swaps were trading 3 basis points lower at 8.29% from its previous close of 8.32% on Thursday.
The Government of India announced the sale of four dated securities for Rs 15,000 crore on January 10, 2014, which includes, (i) for 7.28 % Government Stock 2019 for a notified amount of Rs 3,000 crore (ii) 8.83 % Government Stock 2023 for a notified amount of Rs 7,000 crore, (iii) 8.32 % Government Stock 2032 for a notified amount of Rs 2,000 crore and lastly (iv) 9.23 % Government Stock 2043 for a notified amount of Rs 3,000 crore. The auctions will be conducted using uniform price method on January 10, 2014.
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