India 10Y Yield Eases as Oil Prices Retreat

The yield on India’s 10-year G-Sec rose to around 6.67%, reversing from the previous session, as a sharp jump in oil prices and higher US yields spurred selling. Brent crude topped $100 per barrel after Iran sank two Iraqi oil tankers, intensifying concerns about imported inflation and rupee depreciation in India, which relies heavily on energy imports. The 10-year US yield also neared 4.25%, adding external pressure on domestic long-term rates and prompting cautious trading among investors. The Reserve Bank of India has intervened in the secondary market, buying bonds to help cap the rise in yields, while long-term investors purchased 53 billion rupees ($574 million) of government debt on Wednesday. Despite these measures, traders remain wary of further volatility as energy prices stay elevated and global rates trend higher. The rupee has hovered near record lows, reflecting continued market sensitivity to oil shocks and geopolitical tensions.

The yield on India’s 10-year G-Sec fell to around 6.67%, easing from the previous session, as a sharp pullback in crude oil prices supported demand for sovereign debt. Brent crude retreated to about $88 a barrel after US President Donald Trump signaled the Middle East conflict with Iran could end soon, easing fears of prolonged supply disruptions and inflation risks for India, one of the world’s largest crude importers. Lower energy prices helped improve sentiment toward Indian assets, with the rupee also strengthening. Support also came from the Reserve Bank of India, which has been conducting open market purchases of government bonds to help stabilize the debt market. Meanwhile, traders remained cautious ahead of a large supply of state debt, with Indian states scheduled to raise roughly INR 460 billion through bond sales, limiting further declines in yields.

The yield on India’s 10-year G-Sec climbed to around 6.75%, approaching a one-month high, as surging oil prices and a weakening rupee triggered a selloff in sovereign debt. Brent crude soared roughly 25% to above $115 per barrel as escalating conflict in the Middle East disrupted shipments through the Strait of Hormuz, raising inflation concerns for the world’s third-largest crude importer. The spike in energy prices, coupled with currency depreciation, heightened worries over rising import costs and broader price pressures, prompting investors to demand higher yields. Market participants said the Reserve Bank of India’s planned open market purchase of INR 500 billion in government bonds later in the day, followed by a similar tranche on Friday, could help temper the rise in yields and stabilize the debt market.