Bond yields recede on hopes of improved cash condition

Bond yields, tracing the overnight movements of US Treasury bond yields, edged lower on value buying on expectation of improved liquidity condition. The buzz is that, Reserve Bank of India (RBI) would redeem Rs 33,000 crore of the 7.40% 2012 bonds on Thursday. However, RBI's suspected discreet purchases in the secondary market may further aid bonds.

On the global front, US Treasury debt prices rose on Wednesday as weakness in European manufacturing and slower private-sector hiring in the United States fueled expectations of a global slowdown and boosted demand for low-risk investments. Meanwhile, Brent crude steadied above $118 a barrel on Thursday, reflecting caution among investors ahead of a key US employment report after dismal data from the United States and Europe renewed doubts about the state of the global economy.

Back home, the yields on 10-year benchmark 8.79% - 2021 bonds edged lower by 2 basis points to 8.61% from its previous close of 8.63%.

The benchmark five-year interest rate swaps fell 2 bps to 7.56% from its previous close of 7.58%.

Meanwhile, the Government of India has announced the sale of four dated securities for Rs 18,000 crore on May 4, 2012, which includes, (i) “8.19 percent Government Stock 2020” for a notified amount of  Rs 4,000 crore (nominal) through price based auction, (ii) “9.15 percent Government Stock 2024” for a notified amount of  Rs  8,000 crore (nominal) through price based auction (iii) “8.97 percent Government Stock 2030” for a notified amount of  Rs 3,000 crore (nominal) through price based auction and (iii) “8.83 percent Government Stock 2041” for a notified amount of  Rs 3,000 crore (nominal) through price based auction. The auctions will be conducted using uniform price method. The auctions will be conducted by the Reserve Bank of India, Fort, Mumbai on May 04, 2012 (Friday).