India 10Y Yield Extends Gains

The yield on India’s 10-year G-Sec rose to around 7.13%, extending gains to a six-week high as selling pressure intensified in domestic debt markets amid a sharp jump in global crude prices and US Treasury yields. Government bonds weakened at the start of the week, tracking a broad selloff in global fixed income markets, while Brent crude climbed above $110–$111 per barrel after renewed escalation in US–Iran tensions and reports of an attack on a nuclear facility in the United Arab Emirates. Sentiment was further pressured by US Treasury yields hitting 15-month highs, as investors priced in the risk of persistently high inflation and the possibility of further Federal Reserve tightening. In currency markets, the rupee also touched fresh record lows, heightening concerns that elevated oil prices will inflate India’s import bill and widen the current account deficit.

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.