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Bond yields edge lower on Friday

16 Dec 2011 Evaluate

Bond yields edged lower after central bank kept rates steady and highlighted downside risks to domestic economic growth. Further, absence of any immediate liquidity easing measure by the central bank at the mid-quarterly policy meet also dragged the yields further lower.

Much against the street’s delight, Reserve Bank of India (RBI) in its mid-quarterly monetary policy review, left Cash reserve ratio (CRR) unchanged at 6%. However, the current repo and reverse repo rates of 8.50% and 7.50% respectively have also been retained by India’s central bank.

On the global front, the US 10-year treasury yields, edging back in the direction of a two-month low hit the previous day, inched lower in Asia on Friday, as concerns about the euro zone's sovereign debt crisis provided the required support for safe haven treasuries.

The yields on 10-year benchmark 8.79% - 2021 bonds were trading at 8.39% from its previous close of 8.49% on Thursday.

The benchmark five-year interest rate swaps edged lower at 7.05% from its previous close of 7.08%.

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