Bond yields to open soft on Tuesday

The yield on government bonds may open soft on Tuesday, on expectations of some steps to rein in fiscal deficit.

Treasury executives said yields might be lower without any fresh trigger. Trading would be more sentiment-driven than influenced by any fundamental factors.

Yield on the 10-year benchmark 8.15 per cent, 2022 paper closed at 8.23 per cent on Friday (August 17). It is seen to trade in the 8.22-8.26 per cent band on Tuesday.

The financial markets are closed on Monday on the occasion of Id-ul-Fitr.

Bond prices will also take cues from global factors, especially the movement of crude oil prices on Monday, said a treasury executive of an associate bank of the State Bank of India.

The supply brought in by the auction held on Friday (August 17) might weigh on prices in truncated trading next week. Appetite for the benchmark paper might be subdued, as the bond is expected to be up for sale in the bond auction by the Reserve Bank of India.

Call money rates are expected to open steady at around 8.05 per cent on Tuesday, as systemic liquidity is comfortable. The demand for funds might be low next week, as most banks have already covered a large part of their fortnightly reserve needs this week.