MUMBAI: Indian federal bond yields and swap rates stayed down on Tuesday, tracking lower U.S. yields on renewed worries about the European banking sector.
* Support for domestic bond prices came from traders' expectation the central bank may not be very aggressive in tightening its policy after its chief on Aug. 27 said inflation pressures were easing.
* However, traders were awaiting factory data this week and monthly inflation early next week, both of which will give an indication whether the central bank will go ahead with an expected rate increase on Sept. 16.
* At 2:16 p.m., the yield on the 10-year benchmark bond was down five basis points at 7.94 percent.
* The one-year swap rate was down six basis points at 6.09 percent and the benchmark five-year swap rate was also down six basis points at 6.94 percent, according to Thomson Reuters data.
* Traders were also awaiting the results of the 53-billion-rupee state loan auction later on Tuesday.
* The government is due to sell 30 billion rupees of treasury bills on Wednesday, ahead of a 110-billion-rupee bond sale on Thursday.
* After market hours on Monday, the government said it would sell 40 billion rupees each of 7.17 percent, 2015 bonds and 8.13 percent, 2022 bonds, and 30 billion rupees of 8.26 percent 2027 bonds on Thursday.
* Traders said there was good demand for longer tenor bonds from investors, given current high yield levels. The absence of the benchmark 10-year bond for sale this week also gave some relief.
