India 10Y Yield Climbs on Supply Pressure

The yield on India’s 10-year G-Sec hovered around 7%, retreating from a one-month high as investors returned to government bonds after four straight sessions of losses. Sentiment improved after authorities raised import tariffs on gold and silver to 15% from 6% to curb overseas purchases, support the rupee, and help contain the current-account deficit, which is forecast to widen to 2.5% of GDP in fiscal 2027 due to the US-Iran energy shock. However, gains in the bond market remained limited as elevated global oil prices continued to fuel inflation concerns. Crude prices stayed above $106 per barrel amid persistent tensions between the US and Iran, raising fears of prolonged supply disruptions through the Strait of Hormuz. Meanwhile, India’s overnight index swap rates were largely steady after climbing sharply in recent sessions.

The yield on India’s 10-year G-Sec rose to around 7%, extending gains to reach a month high as investors turned more cautious ahead of key inflation readings and pared exposure to sovereign bonds amid global uncertainty. Sentiment in the debt market has been weighed down by geopolitical tensions and uncertainty over a lasting US–Iran ceasefire, which has kept crude oil prices elevated and fueled imported inflation concerns. At the same time, policymakers have highlighted the broader economic risks, including slower GDP growth and potential deterioration in external balances if elevated oil prices persist. Market participants are now focused on upcoming inflation data, which is expected to provide fresh cues on the Reserve Bank of India’s policy trajectory. In the background, currency weakness has added another layer of pressure, with the rupee recently hitting fresh record lows.

The yield on India’s 10-year G-Sec rose to around 6.96%, edging higher after touching a more than two-week low, as renewed US-Iran tensions in the Middle East pushed oil prices higher and weighed on sentiment. Brent crude rose back above $100 per barrel, raising inflation concerns for the import-dependent economy and reinforcing expectations of stickier domestic price pressures, keeping bond yields elevated. At the same time, attention turned to the government’s INR 34,000 crore auction of the new 10-year bond, with investors assessing demand and pricing expectations around a cut-off yield near 6.95%. The additional supply added upward pressure on yields, as markets factored in absorption risk for the fresh issuance. Overall, higher oil prices and supply concerns from the weekly auction kept yields slightly firmer, even as broader global risk sentiment remained volatile amid ongoing geopolitical uncertainty.