The yield on the Indian 10-year government bond fell further past the 7.2% level in mid-August, approaching the three-month low of 7.1% hit earlier in the month as cooler price data spurred hopes that the RBI will end its tightening cycle soon. Analysts broadly expect the RBI to ease its tightening pace in the upcoming meeting next month after hiking rates by 50bps in August, eyeing the end of rate hikes this year should inflation continue to trend lower. The central bank has raised its key interest rate by 140bps so far this year to tame inflation and support the rupee after it touched record lows in July. In the meantime, Goldman Sachs stated that Indian bonds could be included in global bond indices as soon as 2023, ramping up demand from foreign banks. Also, Reuters reported that the Indian government will issue a new 10-year bond to draw more investor demand, with analysts expecting it to be priced 7-10bps lower than current benchmark levels.
Historically, the India Government Bond 10Y reached an all time high of 14.76 in April of 1996. India Government Bond 10Y - data, forecasts, historical chart - was last updated on August of 2022.
The India Government Bond 10Y is expected to trade at 7.35 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 7.53 in 12 months time.