Bond yields were trading higher on profit-taking after bond prices rallied on Thursday. However, gains in the rupee were limiting a further rise in yields. Bonds rose sharply in the previous session after the current account deficit (CAD) narrowed sharply, providing further comfort on the country's external situation and helping spark rallies in both the rupee and shares.
On the currency front, rupee strengthened to three month high level of sub ‘61/$ level’ after foreign investors posted their biggest daily purchases of shares this year in the previous session, sending Indian equity markets spiraling towards record high levels.
On the global front, U.S. Treasury debt prices fell on Thursday as fears over a war in Ukraine abated, helping drive benchmark yields to their highest levels in a week and also as traders prepared for Friday's key non-farm payrolls report. U.S. nonfarm payrolls are forecasted to have increased by around 149,000 in February, up from the weather-depressed gains of 113,000 in January and 75,000 in December. Meanwhile, brent crude, rising for a second straight session climbed towards $108.50 per barrel on Friday as worsening diplomatic relations between Ukraine and key oil producer Russia stoked supply fears.
The yields on new 10 year Government Stock 2023 were 1 basis up at 8.80% from its previous close of 8.79% on Thursday.
The benchmark five-year interest rate swaps were trading 1 basis point lower at 8.50% from its previous close of 8.51% on Thursday.