Bond yields swaps down after US Fed steps

Bond yields and swaps rates ended down on Wednesday tracking US Treasuries following the US Federal Reserve’s announcement of renewing government debt purchases. The 10-year benchmark bond yield ended at 7.81%, down three basis points on the day. It traded in a range of 7.81% to 7.85% in the day. Volumes were a heavy `13,275 crore ($2.8 billion) compared with Tuesday’s `11,005 crore on the central bank’s trading platform. Dealers continued to show interest in buying the newly issued 8.13% 2022 bond which was also the most-traded one. It ended down 10 basis points on the day at 7.94%.

The benchmark five-year interest rate swap ended at 7.09% down from 7.19% on Tuesday and the one-year swap rate ended at 6.21%, compared with the previous close of 6.25%. Traders said they are now awaiting the industrial output data for June that is due for release on Thursday and monthly inflation number due on Monday for fresh cues on interest rates. Dealers said the 10-year bond yield is expected to move in the 7.80-7.85% band on Thursday. Concerns over Friday’s `12,000 crore of bond auction is likely to prevent any sharp fall in yields even if the IIP data comes lower-than-expected, dealers said.