The Hindu Business Line : Bonds down on higher crude prices

Bond prices fell today due to high crude price and the higher-than-expected cut-off yield set by the RBI for the Government securities auction, under the Market Stabilisation Scheme. Crude price touched a high of $112 for a barrel in the international market. The cut-off yield for the auction of the 6.57 Government paper was at 7.95, while the market was expecting the yield to be in the range of between 7.82 and 7.85 per cent, said dealers. The total volumes on the order matching system were at Rs 3,520 crore. "The slide in the bond prices started in the morning itself because of the high crude price. Dealers are expecting the situation to worsen after tomorrow's auction. Inflation is also likely to be around 7 per cent," said a bond dealer with a private bank. The RBI is expected to suck out about Rs 20,000 crore of surplus liquidity, between today and tomorrow, from the market, through auctions. The 7.99 per cent 2017 10-year benchmark security closed about 35 paise lower. The paper opened at Rs 100.45 (7.92 per cent YTM) and closed at Rs 10.05 (7.98 per cent YTM), against the previous close of Rs 100.43 (7.92 per cent YTM). The 8.33 per cent 2036 29-year paper opened at Rs 97.8 (8.53 per cent YTM) and closed at Rs 97.4 (8.57 per cent YTM). - Our Bureau

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