Bond yields recede due to 29-month low June CPI data; further slide limited

Bond yields were trading lower on Tuesday on account of 29-month low June Retail inflation data, however higher brent crude prices kept a lid on further uptick of bonds. On the macro-front, In yet another encouraging development after four month low headline inflation numbers, provisional annual inflation rate based on all India general Consumer Price Index (CPI) softened to 29 month low of 7.31% in June, as compared to 8.28% in May and 9.87% during the same month previous year, further re-igniting hopes that RBI would cut rates in its third bi-monthly monetary policy on August 5, 2014.

On the global front, U.S. Treasuries prices edged lower on Monday on expectations that Federal Reserve Chair Janet Yellen could take a less accommodative stance on interest rates in a congressional testimony on Tuesday. Meanwhile, Brent crude inched lower on Tuesday, but still held near $107 a barrel as worries over conflict in the Middle East and North Africa supported prices

Back home, the yields on new 10 year Government Stock 2023 were trading 1 basis point lower at 8.77% from its previous close of 8.78% on Monday.

The benchmark five-year interest rate swaps were trading 2 basis points lower at 7.89% from its previous close of 7.91% on Monday.

The Reserve Bank of India has announced the auction of 91-days and 182-days Government of India Treasury Bills for notified amount of Rs 9,000 crore and Rs 6000 crore respectively. The auction will be conducted on July 16, 2014 using 'Multiple Price Auction' method.

The Government of India have announced the sale of Four dated securities for Rs 14,000 crore on July 18, 2014, including (i) 8.35% Government Stock 2022 for a notified amount of Rs 2,000 crore, (ii) 8.60% Government Stock 2028 for a notified amount of Rs 7,000 crore, (iii) 9.20% Government Stock 2030 for a notified amount of Rs 3000 crore and lastly (iv) 9.23% Government Stock 2043 for a notified amount of Rs 2000 crore.