Mumbai: The bond yields ended higher on Wednesday as traders booked profits and trimmed positions ahead of a $3.3 billion bond auction on Friday.
The yield on the most traded 7.02% bond maturing in 2016 ended at 7.48%, up 4 basis points from Tuesday’s close after easing to 7.39% in intra-day trade.
The benchmark 10-year bond yield closed at 7.98%, up three basis points.
Benchmark US Treasury yields touched their lowest in almost three months on Wednesday, with investors seeking safety as fears of contagion from the Greek debt crisis spread, which supported domestic bond prices.
The yield on the new 10-year bond, the 7.80% maturing in 2020, closed at 7.61%, down 2 basis points. The total outstanding amount of the new 10-year bonds in the market is just Rs50 billion and the demand for it is high as it is touted to be the next 10-year benchmark bond.
Volumes were a heavy Rs130.30 billion ($2.9 billion) on the central bank’s trading platform.
“The market is in a trading range and wary of adding long positions ahead of the supplies,” said Sanjay Arya, deputy general manager of treasury at state-run Bank of Maharashtra.
The government is set to sell Rs150 billion of bonds on Friday as it looks to raise Rs2.87 trillion in the April-September period.
It has already sold Rs490 billion of bonds since the start of April.
Industrial output data for March will be released on 12 May and April’s inflation data is due on 14 May. It is closely watched for cues on the central bank’s policy.
In interest-rate futures on the National Stock Exchange, the June contract implied a yield of 8.2310% while the September contract implied 8.1091 percent.
The benchmark five-year interest rate swap was at 6.76/79%, from its previous close of 6.82/85%.