Bond yields trade lower on Thursday

Bond yields edged marginally lower on Thursday as investors wait for policy decisions of the U.S. Federal Reserve that meets next week. However, there are some optimism that consumer inflation eased to a five-month low of 5.05 per cent in August 2016, raising hopes of an interest rate cut next month, when the new RBI governor Dr Urjit Patel presents his first policy review.

In the global market, U.S. Treasury yield curve rose to its steepest levels in more than two months on Wednesday, although bond weakness ebbed after a dramatic selloff on Tuesday sent long-dated yields to three-month highs. Furthermore, Oil prices rebounded in early Asian trade after falling around 3 percent in the previous session, supported by an unexpected fall in U.S. crude inventories.

Back home, the yields on new 10 year Government Stock were trading 2 basis points lower at 7.06% from its previous close of 7.08% on Wednesday.

The benchmark five-year interest rates were trading 1 basis points higher at 6.96% from its previous close of 6.95% on Wednesday.