Mumbai: Bond yields rose on Thursday, in line with US Treasuries and tight cash conditions in the local banking system kept sentiment cautious ahead of a $2.3 billion bond sale on Friday.
The yield on the 10-year benchmark bond ended at 7.53%, three basis points higher than Wednesday’s close. The 10-year bond traded in a range of 7.49 to 7.55%.
Volumes were a moderate Rs95.2 billion ($2 billion) on the central bank’s trading platform.
“Mostly traders were eyeing US cues. But the auction results on Friday would give a direction for next week,” said a trader with a foreign bank.
Treasury yields rose as markets braced for the sale of $13 billion of 30-year US bonds, the final tranche of this week’s supply totalling $70 billion. [US/]
Both the European Central Bank and Bank of England left interest rates unchanged on Thursday.
Tight cash conditions in the system also kept traders on the sidelines. The central bank infused Rs593 billion via its one-day repo auction, which traders said showed the extent of liquidity tightness in the banking system.
Traders also eyed a Rs110 billion bond auction on Friday. India will sell Rs50 billion of 7.80% 2020 bond, Rs20 billion of 8.32% 2032 bond and Rs40 billion of a new five-year bond.
The benchmark five-year interest rate swap ended at 6.59%, from the previous close of 6.57%.
In interest rate futures on the National Stock Exchange, the June contract was at 8.0316%, while the September contract was at 8.1091%.