Bond yields edged tad lower with a likely move to hike foreign fund limit in government debt by $5 billion. Further, RBI governor's comments on tolerance for higher normal level of inflation also added to the gains in bond prices.
On the global front, US 10-year Treasuries prices dropped slightly in Asian trade on Monday as risk appetite rose on an upbeat Chinese manufacturing survey, though continuing worries about the US fiscal situation limited losses. The pace of China's manufacturing activity quickened for the first time in 13 months in November, with the final reading for the HSBC Purchasing Managers' Survey (PMI) rising to 50.5 after seven quarters of slowing economic growth. Meanwhile, Brent crude rose towards $112 per barrel on Monday on signs of reviving economic growth in China, the world's second-biggest oil consumer, and supply concerns triggered by tension in the Middle East.
The yields on 10-year 8.79% - 2021 were trading 1 basis point lower at 8.17% from its previous close of 8.18% on Friday.
The benchmark five-year interest rates were trading unchanged at its previous close of 7.12%.
The Reserve Bank of India has announced the auction of 91-day and 182-day Government of India Treasury Bills for notified amount of Rs 5,000 crore each. The auction will be conducted on December 05, 2012 using 'Multiple Price Auction' method.
Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct Open Market Operations by purchasing the following government securities for an aggregate amount of Rs 12,000 crore on December 4, 2012.
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