Bond yields ease on improving cash conditions

Bond yields edged lower amid improving cash conditions and continued mild recovery. Absence of open market operations this week also weighed on the sentiment. Further, range-bound trading is expected in the bond market until the inflation and factory growth data gets released next week ahead of the monetary policy on March 19

On the global front, US Treasury debt prices fell on Monday as investors weighed recent price gains against political uncertainty in Italy and growth fears in China. Meanwhile, US oil futures fell below $90 a barrel for the first time this year on Monday, declining for a third consecutive session in reaction to slowing growth in China and indications that oil markets are amply supplied.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading 2 basis points lower at 7.85% from its previous close of 7.87% on Tuesday.

The benchmark five-year interest rate swaps were trading flat at 7.19% as at its previous close.

The Reserve Bank of India has announced the auction of 364-day and 91-day  Government of India Treasury Bills for notified amount of Rs 5,000 crore and Rs 7,000 crore respectively. The auction will be conducted on March 6, 2013 using 'Multiple Price Auction' method.