Bonds yields edge lower after RBI announces OMO

Bond yields edged lower on Wednesday as the central bank sought to add more cash through debt purchases. RBI has decided to buy as much as Rs 10000 crore ($1.5 billion) of notes via its open-market operations on September 08, 2016. That will be the first OMO purchase under governor Urjit Patel, who took charge on September 04, 2016. The monetary authority has already infused about Rs 90,000 crore in the year that began on April 1, 2016.

In the global market, US Treasury yields fell across the board , with most maturities falling to two-week lows, after a weaker-than-expected reading of a U.S. services sector index for August diminished expectations the Federal Reserve will raise interest rates when it meets next week. Furthermore, Brent crude inched lower as hopes waned for an agreement between two of the biggest oil producers to freeze output to tackle a global supply glut.

Back home, the yields on new 10 year Government Stock were trading 4 basis points lower at 7.05% from its previous close of 7.09% on Tuesday.

The benchmark five-year interest rates were trading 4 basis points lower at 6.95% from its previous close of 6.99% on Tuesday.