Bond yields tad lower in absence of bond sale this week

Bond yields were tad lower due to the absence of a bond sale this week after their deferral, with an open market purchase of bonds on Friday too keeping the sentiment positive. However, some profit-booking is expected to creep in after the recent sharp rise in prices.

On the global front, US 30-year Treasury bonds traded more than a point lower on Monday on some investor optimism that Washington officials might complete a last-minute deal to avert the 'fiscal cliff' of tax increases and government spending cuts. Meanwhile, Brent crude extended gains on Wednesday, staying above $111 a barrel as the US Congress inched closer to a deal to avert a fiscal crisis, while promising data from top energy consumer China also supported prices. Adding to evidence that its economy was picking up in the last three months of 2012 after slowing for seven straight quarters, China's official manufacturing purchasing managers' index held steady in December at 50.6.

Closer home, the yields on 10-year 8.79% - 2021 were trading lower by 1 basis point at 7.98% from its previous close of 7.99% on Tuesday.

The benchmark five-year interest rates were trading 2 basis points lower to 7.08% from its previous close of 7.10% on Tuesday.

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, to be conducted on January 02, 2013 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 government securities for an aggregate amount of Rs 8,000 crore on January 4, 2013 through multi-security auction using the multiple price method.