India 10Y Yield Extends Gains

The yield on India’s 10-year G-Sec hovered around 7.1%, extending gains for a fourth consecutive session as markets priced in tighter domestic policy expectations. Sentiment was driven primarily by reports that the Reserve Bank of India is weighing all options to support the rupee, including a possible rate hike, additional currency swap operations, and steps to attract overseas dollar inflows. The rupee’s slide toward 97 per dollar has intensified internal RBI discussions, keeping policy tightening in focus ahead of the June 3–5 monetary policy meeting. Additional support came from a rise in US Treasury yields, with the 10-year note edging up to around 4.59% as markets tracked firmer oil prices and Fed minutes that reinforced a cautious but still inflation-sensitive stance, keeping expectations of potential future tightening in play.

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.