India 10Y Yield Falls on Inflation Data

The yield on India’s 10-year G-Sec climbed to around 7.1%, extending gains to reach its highest level since May 2024, as oil prices surged following President Donald Trump’s warning of continued strikes on Iran. The spike in crude costs heightened inflation expectations, intensifying concerns over potential rate hikes by the Reserve Bank of India. Market participants highlighted that oil above $100 a barrel could push inflation past 6%, while expectations of further rate increases have already been partially priced into yields, reflecting persistent geopolitical risks and domestic fiscal uncertainties. Traders also remained cautious ahead of the government’s first FY27 debt sale. Meanwhile, investors assessed economic indicators, including the Manufacturing PMI, which fell to 53.9 in March from 56.9 in February, as factory output and new orders grew at the slowest pace since mid-2022. Markets will be closed on April 3 and will resume on Monday.

The yield on India’s 10-year G-Sec climbed to around 6.9%, extending gains to its highest level since July 2024, as a combination of fiscal pressures and energy shocks pushed borrowing costs higher. Brent crude prices, which have surged over 50% in the past month amid Middle East geopolitical tensions, along with New Delhi’s excise duty cuts on fuel, have clouded both the fiscal and growth outlook, further weighing on bonds. Investors are navigating a shortened trading week, with yields expected to trade in a 6.87%–6.95% range amid the fiscal year-end. While some relief may come from the government’s announcement to frontload only 51% of gross borrowing for fiscal 2027, slightly below market expectations, market participants remain cautious. Debt markets will be closed on March 31, and trading will resume on April 2.

The yield on India’s 10-year G-Sec rose to around 6.87%, extending gains to a sixteen-month high, as global and domestic pressures pushed it higher amid a broad selloff in bonds. Crude oil prices remained volatile near $100 per barrel, keeping inflation and current account pressures elevated, which pushed yields higher. Expectations of heavy government borrowing, including a state debt auction this week totaling around ?395 billion, added further supply-side pressure on bonds. Some relief came from Indian refiners securing roughly 60 million barrels of Russian crude for April delivery and additional Venezuelan barrels, easing near-term energy supply concerns and tempering the pace of yield gains. Reduced Reserve Bank of India intervention after earlier bond purchases left the market more exposed, making yields sensitive to foreign flows and geopolitical developments.