The Hindu Business Line : Bond yields ease on rate cut hopes

Bond yields eased on expectations of a cut in repo and reverse repo rates. The statement by the Finance Minister, Mr P. Chidambaram, that there could be further rate cuts once inflation eases, also helped bond prices rise. The Minister also said that the Government would borrow more. The total traded volumes on the order matching system were Rs 15,213 crore. The 8.24 per cent 10-year 2018 paper opened at Rs 106.75 (7.24 per cent YTM) and closed at Rs 107.0 (7.20 per cent Y TM), against Friday’s close of Rs 107.1 (7.19 per cent YTM). During the day, it touched a high of Rs 107.55 (7.12 per cent YTM). The 7.56 per cent 6-year 2014 paper opened at Rs 101.95 (7.15 per cent YTM) and closed at Rs 102.15 (7.11 per cent YTM). It touched an intra-day Rs 102.44 (7.05 per cent YTM). “The market talk is that there will be some cut in interest rates to improve liquidity and lending and to make more funds available to corporates at better rates. RBI cannot sacrifice liquidity at the moment,” said a bond dealer with a public sector bank.

— Our Bureau

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