Bond yields were trading around the lowest level in the week amidst optimism that the central bank will take steps to stimulate bank lending and counter a slowdown in Asia’s third-largest economy. Traders widely expect Reserve Bank of India to reduce lenders’ reserve requirements by 25 basis points to 4.25% at its next policy review on October 30. The monetary authority last lowered the so-called cash reserve ratio on September 17 to 4.50%.
On the global front, US 10-year Treasuries shed a bit of their earlier gains on Thursday after a batch of Chinese data met market expectations or came in slightly better, somewhat easing concerns about the outlook for the world's second-largest economy. Meanwhile, Brent futures stayed above $113 on Thursday, bolstered by hopes for steady growth in demand after China, the world's second-biggest oil consumer, posted growth that met expectations, while simmering tension in the Middle East too provided additional support.
The yields on 10-year benchmark 8.79% - 2021 were trading unchanged at its previous close of 8.15%.
Meanwhile, the yield on benchmark 8.15% -2022 fell one basis point or 0.01 percentage point to 8.14% from its previous close of 8.15%.
The benchmark five-year interest rates were trading unchanged at its previous close of 6.99%.
The Government of India have announced the sale (re-issue) of three dated securities for Rs 13,000 crore on October 19, 2012, which includes (i) “8.19 percent Government Stock 2020” for a notified amount of Rs 3,000 crore (nominal) through price based auction; (ii) “8.20 percent Government Stock 2025” for a notified amount of Rs 7,000 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 October 19, 2012 (Friday).
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