India 10Y Yield Climbs to 19-Month High

The yield on India’s 10-year G-Sec hovered around 7.1%, rebounding from recent declines as elevated crude oil prices and rising US Treasury yields continued to pressure sentiment across debt markets. Brent crude traded above $107 per barrel after renewed geopolitical tensions in the Middle East fueled concerns over supply disruptions and persistent inflation risks. At the same time, the US 10-year Treasury yield climbed to its highest level in nearly a year, reinforcing expectations that the Federal Reserve may keep interest rates higher for longer. Separately, the Reserve Bank of India moved to boost liquidity in the sovereign debt market by raising annual trading targets for primary dealers. Under the revised framework, the country’s 21 bond market makers are required to trade significantly larger volumes of government securities this financial year, contributing to a sharp rise in activity in the benchmark 10-year bond.

The yield on India’s 10-year G-Sec hovered around 7%, extending losses for another session as traders stayed on the sidelines ahead of the ongoing meeting between US President Donald Trump and Chinese President Xi Jinping. The summit, currently underway (May 14–15), is seen as a key event that could influence the trajectory of the Iran conflict and, in turn, global energy prices. Market sentiment remained subdued as Brent crude held around $106 a barrel, stoking concerns over imported inflation, rupee weakness, and a widening current account deficit in India. The benchmark 6.48% 2035 bond yield stayed near 7.05%, with repeated failures to sustain a break above that level prompting intermittent buying interest and limiting further upside. The rupee also touched fresh record lows amid sustained foreign portfolio outflows, adding further pressure on both external and fiscal balances.

The yield on India’s 10-year G-Sec rose to around 7%, extending gains to reach a month high as investors turned more cautious ahead of key inflation readings and pared exposure to sovereign bonds amid global uncertainty. Sentiment in the debt market has been weighed down by geopolitical tensions and uncertainty over a lasting US–Iran ceasefire, which has kept crude oil prices elevated and fueled imported inflation concerns. At the same time, policymakers have highlighted the broader economic risks, including slower GDP growth and potential deterioration in external balances if elevated oil prices persist. Market participants are now focused on upcoming inflation data, which is expected to provide fresh cues on the Reserve Bank of India’s policy trajectory. In the background, currency weakness has added another layer of pressure, with the rupee recently hitting fresh record lows.