India 10Y Yield Rises on Persistent Supply Pressure

2026-01-27 07:39 By Erika Ordonez 1 min. read

The yield on India’s 10-year G-Sec rose to around 6.67%, approaching the ten-month highs touched last week, as supply concerns continued to outweigh support from the central bank liquidity measures.

The rise in yields was driven primarily by fresh bond supply, with state governments raising INR 398 billion through bond sales, reinforcing concerns that issuance continues to outpace demand.

Although the amount was lower than earlier planned, market participants had been expecting a deeper cut, following a sharp reduction in state borrowing announced last week.

Investors also remained cautious ahead of key fiscal signals, including expectations of elevated government borrowing in the upcoming budget.

Support from the Reserve Bank of India’s liquidity measures, including an INR 1 trillion bond purchase, a USD 10 billion FX swap, and a 90-day variable rate repo operation of INR 250 billion, helped limit the upside in yields, but was insufficient to fully offset supply-related pressures.



News Stream
India 10Y Yield Eases From Three-Month High
The yield on India’s 10-year G-Sec hovered around 6.95%, easing from near three-month highs as traders weighed elevated oil prices against the Reserve Bank of India’s liquidity-management measures. The RBI has announced several reverse repo operations to absorb excess liquidity after the banking system’s surplus hit a record high, signalling its intent to prevent loose monetary conditions from fuelling inflation and putting upward pressure on yields. The central bank is set to conduct a INR 5 trillion overnight variable-rate reverse repo auction on Tuesday, following the withdrawal of INR 2.59 trillion through a 30-day operation a day earlier. However, elevated Brent crude above $97 a barrel remained a key upside risk for yields, as India imports nearly 85% of its crude needs, raising concerns over inflation and government finances. The RBI’s cautious policy stance, including signals that rate hikes could be approaching, also kept yields elevated.
2026-09-08
India 10Y Yield Nears Three-Month High
The yield on India’s 10-year G-Sec rose to around 6.97%, hovering near three-month highs as surplus liquidity and expectations of further RBI cash-draining measures weighed on sentiment. Banking-system liquidity swelled to a record INR 10.73 trillion, prompting the RBI to step up efforts to absorb excess funds after weak demand for its INR 7 trillion 30-day variable-rate reverse repo auction. The central bank received INR 2.59 trillion in bids and followed it with an additional INR 5 trillion overnight operation. Meanwhile, rising oil prices and elevated US Treasury yields added to pressure on Indian bonds, with Brent crude trading near $97 a barrel. The benchmark 6.94% 2036 bond yield ended at 6.9625% on Friday, up 5 basis points for the week, marking a third consecutive weekly increase. The weak auction response also raised concerns that the RBI may need to adopt more aggressive measures to sterilize the excess liquidity.
2026-09-07
India 10Y Yield Extends Losses
The yield on India’s 10-year G-Sec eased to around 6.95%, extending losses for another session as softer US Treasury yields and fading expectations of a September Fed rate hike improved global bond sentiment. Fed Governor Christopher Waller said the central bank could keep rates unchanged this month if upcoming data confirms easing inflation pressures, bringing the probability of a September hike down to around 50% from 63% previously. Meanwhile, strong inflows through the RBI’s special schemes have lifted banking-system liquidity to a record INR 9.7 trillion, supporting demand for shorter-duration government bonds. However, elevated oil prices continued to weigh on sentiment, with Brent crude holding above $95 a barrel on renewed US-Iran tensions. Meanwhile, investors awaited the government’s INR 320 billion bond auction, including INR 210 billion of a new five-year paper, for cues on demand.
2026-09-03