Bond yields up tracking US Treasuries, cash weigh

Bond yields up tracking US Treasuries, cash weigh

Mumbai: Bond yields rose on Thursday, in line with US Treasuries, as traders awaited a slew of economic data from the United States and cash tightness in the local market underpinned sentiment.

The yield on the 10-year benchmark bond ended at 7.57%, higher than Wednesday’s close of 7.50%. Volume was moderate at Rs92.7 billion ($2 billion) on the central bank’s trading platform. U.S. Treasury prices held near their lows for the session on Thursday, after government data showed first-time jobless claims fell within market expectations but remained elevated.

The number of US workers filing new claims for jobless benefits fell last week, while private employers added jobs in May, further evidence the labour market was improving.

The data on Thursday came ahead of the US government’s closely watched employment report on Friday.

The US data came after the local bond market closed for the day.

“As global developments are becoming more important for the domestic monetary policy, players are keen to see the impact of US data on local bond yields," said a dealer with a private bank.

Liquidity tightness in the banking system also weighed on sentiment.

About Rs677 billion has flowed out of the system towards payments for 3G mobile spectrum licenses.

Traders expect the tightness to remain through the month as payment of quarterly advance taxes by companies, due in mid June, is likely to drain another Rs300 billion to Rs350 billion.

The benchmark five-year interest rate swap was at 6.58/61% from its previous close of 6.49/53%.

In interest rate futures on the National Stock Exchange, the June contract implied a yield of 8.2106%, while the September contract ended at 8.1091%.