The Hindu Business Line : Bond yields hit 7-month low

Bond yields dropped by almost four basis points (prices have gained by around 32 paise), touching a seven-month low. The yield on the 10-year benchmark paper dropped to 7.38 per cent from 7.43 per cent on Friday on comfortable liquidity and low oil prices. "The liquidity is comfortable at around Rs 14,000 crore," said a dealer at a private bank. Liquidity under reverse repo with the RBI stood at around Rs 14,465 crore. "The bond yields also tracked the fall in yields on US treasury bills, which have touched 4.55 per cent (4.59 per cent)," he added. Oil is trading at around $59.80 per barrel. "As long as the oil prices do not breach the $60 per barrel mark, it is good for the markets," he said.

Total traded volumes on the NDS-order matching system have jumped to Rs 11,575 crore (Rs 7,345 crore). Overall when the yields touched 7.50 per cent, the market expected them to go down, touching off renewed interest in the bond market, said Mr K. Harihar, Head- Treasury, Development Credit Bank. "With reasonable liquidity and low call rates, the current level of traded volumes is expected to be maintained," he said. Dealers expect a further drop in yields. The 7.59 per cent-10 year-2016 paper opened at Rs 101.1 (7.42 per cent YTM) and closed at Rs 101.40 (7.38 per cent YTM) against Rs 101.07 (7.43 per cent YTM) on Friday. The 8.07-11 year-2017 paper opened at Rs 104.65 (7.41 per cent YTM) and closed at Rs 104.90 (7.38 per cent YTM) against Rs 104.61 (7.41 per cent YTM).