India 10Y Yield Hits 3-Year High on on Oil Surge
The yield on India’s 10-year G-Sec rose to around 7.45%, reaching its highest level since March 2023, as persistently elevated crude oil prices heightened inflation concerns and strengthened expectations of further rate hikes. Brent crude approached $112 per barrel, its highest in five months, amid Red Sea shipping risks and threats to Saudi oil infrastructure, raising concerns over India’s import costs, the rupee and government finances. September inflation accelerated to 5.54%, with economists expecting price pressures to breach the RBI’s upper tolerance band in October. The RBI’s recent shift to a “calibrated tightening” stance has reinforced expectations of further monetary tightening, with swap markets pricing in around 100 basis points of rate hikes over the next 12 months, including a possible 50-basis-point increase in December. Investors are awaiting the release of the RBI’s October policy meeting minutes later on Wednesday for further guidance.
The yield on India’s 10-year G-Sec rose to around 7.45%, reaching its highest level since March 2023, as persistently elevated crude oil prices heightened inflation concerns and strengthened expectations of further rate hikes. Brent crude approached $112 per barrel, its highest in five months, amid Red Sea shipping risks and threats to Saudi oil infrastructure, raising concerns over India’s import costs, the rupee and government finances. September inflation accelerated to 5.54%, with economists expecting price pressures to breach the RBI’s upper tolerance band in October.
The RBI’s recent shift to a “calibrated tightening” stance has reinforced expectations of further monetary tightening, with swap markets pricing in around 100 basis points of rate hikes over the next 12 months, including a possible 50-basis-point increase in December. Investors are awaiting the release of the RBI’s October policy meeting minutes later on Wednesday for further guidance.