Bond yields come off from day’s high on value-buying activities

Bond yields, coming off their intra-day’s high level, were trading lower on value-buying activities by investors, who welcomed new Finance Minister Arun Jaitley's promise to focus on bringing down fiscal deficits and tackling high inflation. However, yields are now expected to gyrate in thin band ahead of Friday’s auction and the central bank's policy review next week.

On the global front, U.S. Treasuries prices rose on Friday on uncertainty ahead of Sunday's European Union and Ukraine elections, which overshadowed stronger-than-expected U.S. housing data and spurred safe-haven bids. Meanwhile, brent crude rose towards $111 per barrel on Tuesday amid supply disruption worries as Ukraine launched air strikes to put down a separatist revolt and Libya struggled to rein in rebels.

Back home, the yields on new 10 year Government Stock 2023 were trading 2 basis points lower at 8.65% from its previous close of 8.67% on Monday.

The benchmark five-year interest rate swaps were trading 3 basis points higher at 8.13% from its previous close of 8.10% on Monday.

The Reserve Bank of India has announced the auction of 364 and 91 days Government of India Treasury Bills for notified amount of Rs 6,000 crore and Rs 9000 crore to be conducted on May 28, 2014 using 'Multiple Price Auction' method.

Additionally, eleven State Governments have offered to sell 4/10 year securities by way of auction for an aggregate amount of Rs 10015 crore on May 27, 2014.

The Government of India have announced the sale of four dated securities for Rs 16,000 crore on May 30, 2014, including (i) 8.35% Government Stock 2022 for Rs 4000 crore, (ii) New 14 Year Government Stock for Rs 7000 crore, (iii) 9.20% Government Stock 2030 for Rs 2000 crore and (iv) 9.23% Government Stock 2043 for a notified amount of Rs 3000 crore.