India 10Y Yield Extend Gains

The yield on India’s 10-year G-Sec rose to around 7.1%, touching its highest level in more than three weeks, driven by a rise in US Treasury yields. Bond yields moved up as sentiment turned increasingly defensive, with investors reacting to a sharp rise in US Treasury yields. The US 10-year yield climbed to a five-week high of about 4.43% after the Federal Reserve left interest rates unchanged in a closely divided decision, reinforcing expectations that borrowing costs may remain elevated for longer. The rise in global rates, alongside weakness in the Indian rupee,  which slipped to a new all-time low, breaching the 75-per-dollar mark, has added further pressure on Indian bonds. The market has already been under strain for weeks due to surging crude oil prices, which continue to stoke inflation concerns and widen fiscal risks.

The yield on India’s 10-year G-Sec hovered near 6.9%, steady after briefly touching a three-week high, as investors remained cautious ahead of the Federal Reserve policy decision and continued to track elevated oil prices amid ongoing geopolitical tensions. Market activity remained subdued, with participants on the sidelines as expectations grew that the Fed would hold rates steady in what is likely the final meeting chaired by Jerome Powell, reinforcing a wait-and-watch stance across global bond markets. Domestic debt sentiment was also weighed down by sustained pressure from oil markets, with prices staying above $111 a barrel as supply risks in the Middle East persisted. In addition, traders avoided large positions ahead of an INR 290 billion government bond auction scheduled later in the week, contributing to the lack of directional movement and keeping yields in a narrow range.

The yield on India’s 10-year G-Sec rose to around 6.95%, extending gains to a three-week high as elevated oil prices triggered broad-based selling in the debt market. The upward movement in yields came as Brent crude remained elevated near $109 per barrel. Foreign demand has also weakened, as higher currency hedging costs have reduced the effective returns for overseas investors, making Indian debt comparatively less attractive. This has been compounded by a broader global move higher in yields, particularly in US Treasuries, alongside a strengthening dollar environment. Separately, the India–New Zealand Free Trade Agreement adds to the broader macro backdrop, granting India wider duty-free access while phasing tariff cuts. In return, a large share of New Zealand’s exports will gradually enter the Indian market tariff-free, with over half benefiting immediately.