Bond yields edged lower on Monday, tracking a fall in U.S. treasury yields. Further, the Bond yields are likely to remain in a tight range this week after the recent sell-off. Moreover, High inflation and global turmoil will not make a case for any sustained rally in the near term. However, short term rates may inch up some more due to tight seasonal liquidity and heavy issuance from banks. Meanwhile, traders were keeping a close track on the rupee moves, which is likely to be the main near-term trigger.
On the global front, U.S. Treasuries prices rose on Friday with benchmark yields falling to their lowest level in over two months on lingering troubles in emerging market economies, leading safe-haven bonds to notch their strongest gains in 20 months in January. Meanwhile, Brent crude dropped to a two-week low on Monday at $106 a barrel as weak factory data from China stoked growth worries, but fresh violence in Iraq and Syria checked losses.
Back home, the yields on new 10 year Government Stock 2023 were trading 1 basis point lower at 8.76% from its previous close of 8.77% on Friday.
The benchmark five-year interest rate swaps were trading 1 basis point lower 8.41% from its previous close of 8.42% on Friday.
The Reserve Bank of India has announced the auction of 364-days and 91-days Government of India Treasury Bills for notified amount of Rs 6,000 crore and Rs 7000 crore respectively. The auction will be conducted on February 5, 2014 using 'Multiple Price Auction' method.
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