Banks see treasury yields easing this week
Mumbai: Yields on government securities are expected to ease next week and will be in the range of 8.12-8.17 percent for 10-year benchmark bonds, treasury officials of various banks have said.
"Yields are likely to be in the range of 8.12-8.17 for 10-year benchmark bonds next week as there is increasing expectation that the central bank may take some steps for monetary easing after the lower inflation number of January," Indian Overseas Bank General Manager,treasury,T S Srinivasan said.
Inflation rate,based on wholesale price index,fell to a 26-month low at 6.55 percent in January.
Referring to the deep liquidity shortage in the system,Srinivasan said that it would impact the short-term yield.
"Spending by government departments is likely to come to the system from the middle of February,which may ease liquidity shortage to an extent. Also,open market operations by RBI are likely to ease the liquidity situation a bit."
Banks have been borrowing daily from the RBI's repo window,around Rs 1.5 lakh crore in the recent past. This is above the comfort level of the central bank,pegged at Rs 60,000 crore.
Union Bank of India Treasury Head V Mhatre said,the yields on 10-year benchmark will be in the range of 8.15 to 8.17 percent this week.
"Bond yields are likely to be around 8.15 to 8.17 percent in the coming week and there is less possibility of further easing due to tight liquidity situation," he said.
Mhatre also said the current inflation number may not be sustainable due to possibility of rise in oil prices and other global economic factors.