Bond yields edge lower on Monday

Bond yields were trading lower on absence of any fresh triggers, as traders awaited the release of factory output data on Sept 12, for further direction. Further, absence of a debt sale this week is also expected to keep the pressure off bond yields. Street is widely expecting the index of industrial production to edge up 0.3 percent year-on-year in July, after shrinking 1.8 percent in June, which was the third contraction in four months.

On the global front, US treasuries gained in Asian trade on Monday after last week's downbeat US employment data heightened expectations of more bond-buying stimulus ahead of US Federal Reserve’s meeting, scheduled to be held on September 12-13. Meanwhile, Brent crude futures climbed above $114 a barrel on Monday, but gains were capped as expectations for the US Federal Reserve launching further stimulus measures counterbalanced weak Chinese industrial output data.

The yields on 10-year benchmark 8.79% - 2021 were trading 2 basis points lower at 8.18% from its previous close of 8.20%.

The benchmark five-year interest rates were trading flat at its previous close of 7.21%.

The Reserve Bank of India has announced the auction of 91-day Government of India Treasury Bills for notified amount of  Rs 7,000 crore and Rs 5,000 crore respectively. The auction will be conducted on September 12, 2012 using 'Multiple Price Auction' method.