India 10Y Yield Retreats Ahead of Fed Decision

The yield on India’s 10-year G-Sec edged down to around 6.7%, retreating from earlier gains as investors weighed easing oil prices and awaited the US Federal Reserve’s policy decision. Brent crude held above $100 per barrel amid ongoing Middle East tensions but has stabilized in recent sessions, providing some relief to bond markets. Adding to the downward pressure, US Treasury yields fell for the third consecutive day as investors widely expect the Federal Reserve to keep interest rates unchanged. On the local front, traders also monitored the RBI’s auction of 340 billion rupees in 91-, 182-, and 364-day treasury bills. While long-term yields eased, tightening liquidity, with the banking system surplus falling to roughly 820 billion rupees from a mid-March average of 2.5 trillion, continues to support upward pressure on short-term rates.

The yield on India’s 10-year G-Sec rose to around 6.72%, extending gains for the fourth consecutive session, as surging oil prices and prolonged geopolitical tensions fueled selling pressure. Crude prices climbed sharply after President Donald Trump signaled that the standoff with Iran could continue for several more weeks. The move was compounded by a weak Indian rupee and sustained foreign portfolio outflows, which reduced demand for local debt. Global bond markets also pressured yields higher, with US Treasury rates climbing in a steepening trend as investors priced in inflation risks from elevated energy costs. Brent crude remains above $100 per barrel, keeping sentiment under pressure amid lingering supply concerns. Monetary policy expectations are shaping markets as well, with the Federal Reserve expected to hold rates steady while investors watch for its inflation outlook.

The yield on India’s 10-year G-Sec rose to around 6.68%, extending gains for a second straight 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 net 98 billion rupees of government debt over the past two sessions. 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.