MUMBAI: Indian federal bond yields and swap rates edged lower on Thursday as traders preferred to buy safe-haven government debt amid concerns over the euro zone's debt crisis and weakened economies.
The weekly price data, due around 0630 GMT, will be eyed for directional cues, local traders said.
Total volumes on the central bank's electronic trading platform were slightly lower at 21.85 billion rupees ($479 million) compared with the normal 30 billion to 40 billion rupees dealt in the first two hours of trade.
The benchmark five-year overnight indexed swap rate was down 14 bps at 6.81 percent while the one-year rate was 8 bps lower at 7.82 percent.
"Bond yields are lower tracking lower US yields, euro and oil prices. Weekly inflation data would be a crucial thing to watch out for and we also have the auction," said Reshma Nayak, a fixed-income dealer with Saraswat Co-operative Bank.
For the 10-year bond yield, 8.35-8.37 percent levels seem to be a good support for now, Nayak said, adding she expects yields to move in a 8.27-8.35 percent band during the day.
Brent crude fell, staying below $111 a barrel on Thursday as ongoing concerns over Europe's debt crisis and a firmer dollar drew investors away from riskier assets like oil and into the safe havens of gold and the Swiss franc.
The Swiss franc edged higher versus the euro on Thursday, and may test a record high in coming days after the Swiss National Bank's latest steps to curb franc strength fell short of expectations.
The 10-year US benchmark bond yield was trading at 2.15 percent, down 2 bps from late New York trade when it had shed 6 bps.
The weekly food and fuel inflation data due around noon will be watched. Headline inflation eased in July, although the still-high headline number and persistent price pressures in manufactured goods raised the odds that policy will have to stay tight despite the rising risks to growth.
Dealers will also watch results of the 100 billion rupees bond auction post 0900 GMT. The government is selling 30 billion rupees each of 8.07 percent 2017 bonds and 8.28 percent 2032 bonds as well as 40 billion rupees of 8.08 percent 2022 bonds.
Copyright Reuters, 2011
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