Bond yields edge higher tracing overnight surge of U.S. treasury yields

Bond yields were trading higher on Wednesday tracking rise in U.S. treasury yields. However, the yields are expected to trade in tight range ahead of the release of crucial macro-economic data. On the macro front, street widely expects factory output to rise for the first time in April since January, to reflect healthy growth in core industries, while consumer price index is also expected to ease. On the global front, U.S. benchmark 10-year yields scaled one-month peaks on Tuesday, as investors have started to price in the prospect of higher interest rates following recent upbeat U.S. economic data and hawkish comments from Federal Reserve officials. Meanwhile, Brent futures rose towards $110 a barrel on Wednesday amid expectations of a fall in U.S. gasoline stockpiles, pointing to a healthy outlook for demand from the world's top oil consumer. Back home, the yields on new 10 year Government Stock 2023 were trading 2 basis points higher at 8.58% from its previous close of 8.56% on Tuesday. The benchmark five-year interest rate swaps were trading 4 basis points higher at 7.84% from its previous close of 7.80% on Tuesday. The Reserve Bank of India (RBI) has announced the auction of 364 and 91 days Government of India Treasury Bills for notified amount of Rs 6,000 crore and Rs 8000 crore respectively. The auction will be conducted on June 11, 2014 using 'Multiple Price Auction' method.