India 10Y Yield Climbs to 19-Month High

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, energy shocks, and heavy debt supply pushed borrowing costs higher. Elevated Brent crude near $105–$110 per barrel amid the Middle East conflict intensified domestic inflation and current account pressures, spotlighting India’s vulnerability as a major oil importer. The government’s sharp excise duty cuts on petrol and diesel, aimed at shielding consumers from rising energy costs, heightened concerns over the fiscal deficit and fiscal sustainability, raising investor anxiety. At the same time, record debt supply from both central and state governments, including ongoing auctions this week, added supply-side strain, keeping the market on edge. The rupee also hit record lows past 94/USD, while equities fell sharply, reflecting broader market jitters.

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.

The yields on India’s 10-year G-Sec rose to around 6.77%, its highest in five weeks, as investors reassessed the impact of volatile oil prices on inflation, growth, and monetary policy. Government bonds extended losses for a sixth consecutive session as markets priced in the risk that persistently high crude prices could lead to tighter policy conditions. Brent crude, which has fluctuated amid geopolitical tensions, hovered around $107 per barrel, above policymakers’ comfort levels. At the same time, funding pressures in the banking system have pushed lenders toward market borrowing, with weak deposit growth and higher bulk deposit rates straining traditional funding sources. Indian Bank is among those tapping the market, planning to raise over $500 million through seven-year infrastructure bonds. Meanwhile, the rupee weakened past 93 per dollar to a fresh low, reflecting concerns over a widening current account deficit and continued global risk pressures.