India 10-Year Yield Rises on Higher US Yields

The yield on India’s 10-year G-Sec rose to 7.12%, extending gains for a third consecutive session as domestic bonds tracked a broad selloff in US Treasuries. A sharp rise in US yields to multi-month highs has compressed the India–US rate differential.The spread between 10-year Indian and US yields has narrowed to around 244 basis points, its tightest in two months, with traders noting discomfort when the gap approaches or falls below 250 bps. This narrowing has also weighed on foreign portfolio flows, which have slowed after a stronger buying phase earlier in the month. US yields have risen on expectations of renewed Federal Reserve rate hikes, pushing long-end rates higher and rippling across global bond markets. In India, elevated crude prices near $111 per barrel are adding to inflation concerns, further influencing sentiment and keeping yields elevated.

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.