Bond yields tread water after better-than-expected cut-offs at an auction of treasury bills

Bond yields were treading water after better-than-expected cut-offs at an auction of treasury bills. While, the implicit cut off yield price for 91 day treasury bill auction was at 8.81%, it was fixed at 8.87% for 182-Days Treasury Bills auction, which was conducted earlier in the day. The yields were trading lower in early deals tracking a fall in its US counterpart amidst cautious sentiment ahead of the national elections outcome next week. On the global front, 30-year bond and other long-maturity US Treasuries rose on Tuesday in thin, meandering trade ahead of potentially market-moving congressional testimony by Federal Reserve Chair Janet Yellen. Meanwhile, Brent crude edged higher above $107 per barrel on Wednesday after an industry report showed US crude stocks declined last week, while increasing geopolitical risks in Ukraine helped put a floor under prices. Back home, the yields on new 10 year Government Stock 2023 were trading steady at its Tuesday’s close of 8.78%. The benchmark five-year interest rate swaps was trading 1 basis point lower at 8.31% from its previous close of 8.32% on Tuesday. The Reserve Bank of India had announced the auction of 91 and 182 days Government of India Treasury Bills for notified amount of Rs 9,000 crore and Rs 6000 crore respectively, to be conducted on May 7, 2014 using 'Multiple Price Auction' method. The Government of India announce the sale of Four dated securities for Rs 16,000 crore on May 9, 2014, including (i) 7.80% Government Stock 2020 for a notified amount of Rs 4,000 crore, (ii) 8.83% Government Stock 2023 for a notified amount of Rs 7,000 crore, (iii) 8.32% Government Stock 2032 for a notified amount of Rs 2,000 crore and lastly (iv) 8.30% Government Stock 2042 for a notified amount of Rs 3,000 crore on May 9, 2014.