Central bond yields eased on Monday

• tanvi_singh
• February 8, 2010

Central bond yields eased on Monday cushioned by the lack of fresh supplies scheduled till end-March 2010, but traders were wary of adding fresh positions ahead of the budget announcement scheduled at month-end. the yield on the benchmark 10-year bond was at 7.66 per cent, below Friday’s closing of 7.68 per cent.

Dealers expect the 10-year bond yield to move in the range of 7.65-68 per cent in the day. The government completed its scheduled record gross market borrowing of 4.51 trillion rupees for the current fiscal year on Friday and fresh bond supplies would come in only the next fiscal year.

Dealers said the federal budget scheduled on Feb 26 will be closely watched for the governmen’t borrowing plan for 2010/11. Industrial output data for December is due on Friday while wholesale price inflation for January is due on Monday.

Upcoming data would be key to form expectations from the budget and the monetary policy, dealer said. The economy is expected to grow at 7.2 per cent in 2009/10, the government said on Monday, reinforcing the possibility it may start to unwind its fiscal stimulus in the forthcoming budget.

Dealers said bonds did not react to the forecast as it was in line with market expectations.
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• Last Modified: February 8, 2010
• Filed Under: Latest News, MARKETS, NATION, WORLD