India 10Y Yield Slips to 2-Week Low

The yield on India’s 10-year G-Sec slipped to around 6.9%, extending losses for the third session to reach a two-week low after the Reserve Bank of India kept its benchmark policy repo rate unchanged at 5.25% and maintained a neutral policy stance. The central bank also signaled its readiness to curb excessive volatility in the rupee, reinforcing investor confidence, while projecting economic growth at 6.9% and inflation at 4.6% for the current financial year. Further downward pressure on yields came from easing oil prices and improved global risk sentiment following a two-week ceasefire agreement between President Donald Trump and Iran. The development reduced concerns over supply disruptions linked to the reopening of the Strait of Hormuz, with Brent crude falling more than 13% to below $95 per barrel.

The yield on India’s 10-year G-Sec edged down to around 7%, retreating from multi-year highs on renewed buying interest as concerns over tighter central bank policy softened. Traders stated that improved risk appetite stemmed from expectations that the Reserve Bank of India may opt to hold rates steady, dampening earlier speculation of aggressive tightening to counter inflationary pressures. Early selling pressure, triggered by the unexpected continuation of a 340-billion-rupee government bond auction, later eased as participants reassessed rate prospects. Markets are now focused on the RBI’s policy decision scheduled for April 8. Meanwhile, losses were partially capped as US Treasury yields rose amid fading hopes for a deal with Iran to reopen the Strait of Hormuz before President Donald Trump’s Tuesday-night deadline.

The yield on India’s 10-year G-Sec climbed to around 7.1%, extending gains to reach its highest level since May 2024, as oil prices surged following President Donald Trump’s warning of continued strikes on Iran. The spike in crude costs heightened inflation expectations, intensifying concerns over potential rate hikes by the Reserve Bank of India. Market participants highlighted that oil above $100 a barrel could push inflation past 6%, while expectations of further rate increases have already been partially priced into yields, reflecting persistent geopolitical risks and domestic fiscal uncertainties. Traders also remained cautious ahead of the government’s first FY27 debt sale. Meanwhile, investors assessed economic indicators, including the Manufacturing PMI, which fell to 53.9 in March from 56.9 in February, as factory output and new orders grew at the slowest pace since mid-2022. Markets will be closed on April 3 and will resume on Monday.