India 10Y Yield Climbs on Supply Pressure

The yield on India’s 10-year G-Sec eased to around 6.73%, edging lower from the previous session, as traders held positions rangebound ahead of January inflation data. India's consumer prices are expected to rise to 2.4%, within the RBI’s 2%-6% target band, helping cap upward pressure. At the same time, the broader liquidity backdrop from earlier RBI actions has helped prevent a sharper rise in yields. Meanwhile, large state borrowing and upcoming debt auctions continue to keep supply pressure in focus. Investors remain attentive to the central bank’s next policy signals, as the repo rate was unchanged at the February policy meeting and no additional liquidity operations were announced. Over the past month, the 10-year yield has inched up 13 basis points but remains effectively flat compared with a year ago. Market participants will continue to monitor RBI liquidity management, upcoming inflation prints, and debt supply.

The yield on India’s 10-year G-Sec rose to around 6.76%, approaching a one-year high touched earlier in February, as persistent supply pressure continued to weigh on demand. Sentiment has been dented by a heavy slate of state bond issuance, with markets cautious ahead of a large state bond auction later today. Indian states are set to raise about INR 486 billion, the largest weekly auction so far this financial year and above the scheduled amount, reinforcing concerns over an already crowded supply pipeline into the fiscal year-end. Bond markets have also remained fragile after the Reserve Bank of India held rates steady last week and refrained from announcing any fresh liquidity support. While the policy pause was widely expected, investors had anticipated measures to ease liquidity conditions or absorb rising issuance, keeping yields elevated as traders continue to eye resistance near 6.80%.

The yield on India’s 10-year G-Sec rose to around 6.7%, recovering from two-week lows, as tight domestic liquidity and global rate trends pushed investors to demand higher returns. The Reserve Bank of India kept its repo rate at 5.25% in February 2026, after a 25-basis-point cut in December. While the hold would normally support bond prices, its impact was limited by domestic liquidity pressures and pre-policy market positioning. Indian lenders face a deposit shortfall and are reluctant to buy government bonds, as RBI’s FX interventions and liquidity injections have drained rupee funds. Banks are seeking relief on LCR norms, HTM flexibility, and CRR adjustments, with limited market participation keeping yields elevated. Additional support came from US Treasury yields, with the 10-year–2-year spread nearing a four-year high amid expectations of Fed rate cuts and persistent concerns over inflation and the fiscal deficit.