India 10Y Yield Sideways Ahead of Record State Bond Sale

2026-01-05 08:04 By Joshua Ferrer 1 min. read

The yield on India’s 10-year G-Sec held around 6.6%, trading in a tight range as investors awaited this week’s state bond auctions.

Indian states are set to borrow INR 268 billion, below the previously scheduled 362 billion, as part of a record INR 8 trillion total issuance plan for January-March.

Traders have been offloading bonds over the past few weeks, uncertain whether the market can absorb the surge in supply.

Liquidity has also tightened, with the banking system’s daily surplus averaging 614 billion rupees as of January 2, down from 1.78 trillion in November.

Foreign investors remain cautious after selling a net 123 billion rupees of index-linked bonds in December, while the rupee weakness adds to outflow concerns.

To support the market, the RBI bought INR 500 billion of bonds and plans an additional INR 1 trillion in purchases this month, alongside a USD 10 billion FX swap scheduled for next Tuesday.

However, lenders are expected to offer bonds at higher-than-prevailing yields.



News Stream
India 10Y Yield Extends Gains as Oil Prices Surge
The yield on India’s 10-year G-Sec edged higher to around 7.46%, extending gains for another session as surging oil prices weighed on investor sentiment, while falling U.S. Treasury yields limited the increase. Brent crude climbed above USD 114 a barrel to a five-month high following Houthi attacks on Saudi Arabia, raising concerns over supply disruptions. As India imports nearly 90% of its oil requirements, sustained price increases threaten to widen the import bill, fuel inflation, pressure the rupee, and weaken public finances. Meanwhile, investors remained cautious ahead of a INR 330 billion government debt sale, keeping demand subdued. The benchmark 6.94% 2036 bond yield rose, nearing the 7.50% level. However, U.S. Treasury yields fell below 5% amid weaker economic data, an equity selloff, and concerns over the returns on AI spending and its growth implications.
2026-10-23
India 10Y Yield Hits 3-Year High on RBI Tightening Signals
The yield on India’s 10-year G-Sec rose to 7.45%, reaching its highest level since March 2023, as minutes from the Reserve Bank of India’s latest monetary policy meeting reinforced expectations of further interest rate hikes to curb inflation. Policymakers flagged increasing signs of broadening price pressures amid elevated crude oil prices and rising food costs following deficient monsoon rainfall, with September retail inflation accelerating to 5.54%, nearing the RBI’s 6% tolerance ceiling. Markets have priced in slightly more than 100 basis points of rate hikes over the next 12 months, although policymakers cautioned that overly aggressive tightening could weigh on economic growth. Brent crude remained above $110 a barrel amid escalating Middle East tensions, adding to inflation concerns and keeping yields elevated. The persistent bond selloff following the RBI’s recent 25-basis-point repo rate hike to 5.50% and shift to a “calibrated tightening” stance further dampened demand.
2026-10-21
India 10Y Yield Falls on US Treasury Decline
The yield on India’s 10-year G-Sec fell to around 7.36%, extending losses for another session as a sharp decline in US Treasury yields spurred value buying, offsetting inflation concerns from elevated crude oil prices. Indian yields tracked the US 10-year Treasury yield’s decline to around 5.05% amid expectations that the Federal Reserve may delay its next rate hike until December. Easing oil prices following a potential improvement in Russian supply also supported Indian yields. However, upside inflation risks persist, with September consumer inflation accelerating to 5.54% and potentially exceeding the RBI’s 6% upper tolerance limit in October. Meanwhile, expectations of further RBI tightening, growing bets on a 50-basis-point rate hike in December, and tighter banking-system liquidity continue to weigh on sentiment. Markets are closed on Tuesday in observance of Dussehra and will resume on October 21.
2026-10-19