India 10Y Yield Rises on Oil Surge

The yield on India’s 10-year G-Sec rose to around 6.74%, pausing recent losses as escalating tensions in the Middle East drove crude oil prices and US Treasury yields higher, reducing demand for sovereign debt. Brent crude climbed after Iran expanded its strikes to Qatar and the United Arab Emirates in response to fresh US attacks, heightening concerns over energy supplies and inflation. Investors also remained cautious ahead of India’s June inflation data, with CPI expected to rise to 4.3% from 3.93% in May, moving above the RBI’s 4% target for the first time in 16 months amid higher food and fuel prices, the Iran conflict, and a weaker monsoon. Meanwhile, optimism over India's potential inclusion in Bloomberg's Global Aggregate Index continued to underpin sentiment after foreign investors purchased $4.1 billion of government bonds through the Fully Accessible Route over the six weeks beginning June 1.

The yield on India’s 10-year G-Sec fell to around 6.72%, extending losses for another session as easing crude oil prices, softer US Treasury yields, and sustained foreign inflows boosted demand for sovereign debt. Brent crude dropped more than 2% to about $76 per barrel after nearing $80 earlier in the week. Meanwhile, the 10-year US Treasury yield fell about 3 basis points, supporting demand for Indian bonds by preserving their yield premium. Foreign investors remained net buyers, purchasing INR 15 billion of government securities on Thursday, bringing cumulative inflows to nearly INR 380 billion since early June. However, gains were capped as investors awaited the government's INR 320 billion auction of five-year and 40-year bonds, with demand expected to guide the market's next move. Softer oil prices and a stable rupee also reinforced expectations of a more favorable inflation outlook.

The yield on India’s 10-Year G-Sec rose to around 6.76%, reaching one-week highs as renewed Middle East tensions lifted crude oil prices and US Treasury yields, weighing on demand for sovereign debt. Brent crude extended its recent rally after the US launched fresh strikes on Iran and revoked a license allowing Iranian crude sales following attacks on commercial vessels in the Strait of Hormuz, heightening concerns over energy supplies and inflation. Meanwhile, the yield on the 10-year US Treasury note climbed to 4.565%, its highest level in nearly a month, adding upward pressure on Indian yields. Despite the selloff, sentiment remained supported by sustained foreign inflows, with overseas investors purchasing a net INR 362 billion of government securities since the start of June under the Fully Accessible Route. Earlier this week, improved monsoon conditions narrowed the cumulative rainfall deficit to 24% as of July 5 from 43.1% a week earlier, easing inflation concerns.