Short-term govt bond yields climb
Following Tuesday’s announcement of a hike in the cash reserve ratio (CRR) and the withdrawal of the second window for liquidity adjustment, yields on government bonds rose on Wednesday.
By TNN |
MUMBAI: Short-term yields are back on their northward journey. Following Tuesday’s announcement of a hike in the cash reserve ratio (CRR) and the withdrawal of the second window for liquidity adjustment, yields on government bonds rose on Wednesday. Tracking the 615-point fall in the BSE Sensex, the rupee also fell by 8 paise against the dollar.
On Wednesday, RBI had conducted auctions of bonds worth Rs 5,000 crore under the market stabilisation route and treasury bills worth another Rs 4,000 crore.
The central bank set a cut-off yield of 6.48% on the 91-day t-bill, up by almost 200 basis points from the previous cut-off yield set at 4.46% exactly a week ago. Similarly, RBI fixed the cut-off yield of the 364-day t-bill at 7.24%, compared to the previous cut-off set at 6.58% a fortnight ago.
The central bank declared a cut-off yield of 7.74% on the 5.48% bond maturing in 2009, issued under the MSS route. The rise in yields was not confined only to near-term bonds.
Bond traders sold securities to mobilise funds to meet the 50 basis points hike in the CRR, effective from August 4. The yield on the benchmark bond, the 7.99% bond maturing in 2017, closed at 7.91%, up from Tuesday’s close of 7.84 %.
The hike in the CRR would suck out up to Rs 15,000 crore from the system, bringing yields and the overnight call money rates under pressure. Treasury managers expect the 10-year bonds to trade at a yield of 8% in the near term, while call rates could rise to 6% levels. On Friday, the RBI would sell another Rs 10,000 crore worth of bonds, bringing further pressure on the liquidity.
Rates on the collateralised-borrowing market ended the day at 0.03%. The repo borrowing rates also remained low, closing at 0.15% for the day.
On RBI’s liquidity adjustment facility, bids worth Rs 85,715 crore were placed by banks in the morning auction, out of which, bids worth Rs 1,988 crore were accepted. In the afternoon auction, bids worth Rs 50,530 crore were placed and Rs 1,011 crore was mopped up by the central bank.
As global investors trimmed their positions with the BSE Sensex dipping by 615 points, the rupee closed weaker at 40.45 levels per dollar, down from the previous close of 40.37 levels.
Premia on forward contracts rose sharply, with the yield on the one-month premia ending at 1.51%, up from the previous close of 1.15%. Similarly, the yield on the six-month premia closed at 1.89% (1.64%) and that on the one-year contract ended at 1.84% (1.67%).
On Wednesday, RBI had conducted auctions of bonds worth Rs 5,000 crore under the market stabilisation route and treasury bills worth another Rs 4,000 crore.
The central bank set a cut-off yield of 6.48% on the 91-day t-bill, up by almost 200 basis points from the previous cut-off yield set at 4.46% exactly a week ago. Similarly, RBI fixed the cut-off yield of the 364-day t-bill at 7.24%, compared to the previous cut-off set at 6.58% a fortnight ago.
The central bank declared a cut-off yield of 7.74% on the 5.48% bond maturing in 2009, issued under the MSS route. The rise in yields was not confined only to near-term bonds.
Bond traders sold securities to mobilise funds to meet the 50 basis points hike in the CRR, effective from August 4. The yield on the benchmark bond, the 7.99% bond maturing in 2017, closed at 7.91%, up from Tuesday’s close of 7.84 %.
The hike in the CRR would suck out up to Rs 15,000 crore from the system, bringing yields and the overnight call money rates under pressure. Treasury managers expect the 10-year bonds to trade at a yield of 8% in the near term, while call rates could rise to 6% levels. On Friday, the RBI would sell another Rs 10,000 crore worth of bonds, bringing further pressure on the liquidity.
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Rates on the inter-bank call market closed at 0.15% on Wednesday after transactions worth Rs 9,967 crore were carried out. The rates opened at 0.15%, and reached an intra-day high of 0.25%. The low for the day touched 0.05%, at which level a few stray deals were carried out.Rates on the collateralised-borrowing market ended the day at 0.03%. The repo borrowing rates also remained low, closing at 0.15% for the day.
On RBI’s liquidity adjustment facility, bids worth Rs 85,715 crore were placed by banks in the morning auction, out of which, bids worth Rs 1,988 crore were accepted. In the afternoon auction, bids worth Rs 50,530 crore were placed and Rs 1,011 crore was mopped up by the central bank.
As global investors trimmed their positions with the BSE Sensex dipping by 615 points, the rupee closed weaker at 40.45 levels per dollar, down from the previous close of 40.37 levels.
Premia on forward contracts rose sharply, with the yield on the one-month premia ending at 1.51%, up from the previous close of 1.15%. Similarly, the yield on the six-month premia closed at 1.89% (1.64%) and that on the one-year contract ended at 1.84% (1.67%).
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