India 10Y Yield Holds at 3-Year High
India's 10-year government bond yield held at 7.465%, remaining near its highest level since March 2023 as elevated oil prices and expectations of further monetary tightening weighed on bonds. Brent crude surged above USD 117 a barrel last week amid Middle East supply concerns, heightening inflation risks for India, which imports nearly 90% of its oil needs. Additionally, persistently high energy costs could strain public finances and worsen the country's external balance. At the same time, markets are pricing in slightly more than 100 basis points of rate increases over the next 12 months, with some participants anticipating a 50-basis-point hike in December. Tighter domestic liquidity has also added to selling pressure on government bonds. Investors now await the Federal Reserve's decision on Wednesday for signals on the US rate outlook and global bond yields.
India's 10-year government bond yield held at 7.465%, remaining near its highest level since March 2023 as elevated oil prices and expectations of further monetary tightening weighed on bonds. Brent crude surged above USD 117 a barrel last week amid Middle East supply concerns, heightening inflation risks for India, which imports nearly 90% of its oil needs. Additionally, persistently high energy costs could strain public finances and worsen the country's external balance. At the same time, markets are pricing in slightly more than 100 basis points of rate increases over the next 12 months, with some participants anticipating a 50-basis-point hike in December.
Tighter domestic liquidity has also added to selling pressure on government bonds. Investors now await the Federal Reserve's decision on Wednesday for signals on the US rate outlook and global bond yields.