Bond yields edge lower for second consecutive session ahead of July IIP data

Bond yields edged lower in the range bound trade on Tuesday as investors’ preferred staying on the sidelines ahead of the July industrial output data on Sept 12. Street is widely expecting the index of industrial production (IIP) 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 10-year Treasuries inched higher in subdued trade in Asia on Tuesday as investors waited to see whether the Federal Reserve will announce another bond-buying programme after its policy meeting ends on Thursday. Market expectations for the Fed to announce a third round of bond purchases, known as QE3, at the conclusion of its September 12-13 policy meeting have increased since data last Friday showed US jobs growth slowed sharply in August.

Meanwhile, Brent crude futures fell for the first time in four sessions on Tuesday as investors took profits. However, prices of Brent crude remained above $114 a barrel as declines remained limited on the hopes that US Federal Reserve would unveil further steps to stimulate the economy this week.

The yields on 10-year benchmark 8.79% - 2021 edged 1 basis point lower at 8.17% from its previous close of 8.18%.

The benchmark five-year interest rates were trading flat at 7.19%

The Reserve Bank of India has announced the auction of 91 and 182 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.