Mumbai: Bond yields came off one-week lows on Thursday as traders pared positions ahead of the bond auction this week and awaited the result of the central bank’s Rs60 billion bond buyback.
At 12:10 pm, the 10-year benchmark bond yield was unchanged at Wednesday’s close of 6.55%. It had hit 6.51% in early deals, which was its lowest since 26 May.
Dealers said the selling was to make space for the Rs150 billion of bonds the government is due to sell on Friday.
A Reuters poll showed the central bank may set a cut-off yield of 6.94% for the 2017 bond at its buyback auction. It may set a cut-off yield of 7.35% for the 2022 bond and 7.58% for the 2032 bond.
India’s wholesale price index based inflation rose 0.48% in the 12 months to 23 May, lower than previous week’s annual rise of 0.61%.
Dealers said the inflation data did not have any effect on bonds as the number was already very low.