India 10Y Yield Extends Gains
India’s 10-year government bond yield climbed to around 7.32%, extending its recent gains as accelerating domestic inflation and heavy government bond supply weighed on debt prices. Retail inflation accelerated to 6.09% in October, breaching the Reserve Bank of India’s 6% upper tolerance limit and strengthening expectations of another rate hike in early December, keeping upward pressure on yields. At the same time, the government’s planned INR 340 billion auction of the benchmark 2036 bond will lift its outstanding issuance to INR 2.72 trillion, a record high for a single security, adding to supply pressures. The US 10-year Treasury yield also rose above 5%, reducing the relative appeal of Indian debt. Moreover, Brent crude recently rebounded toward $96 per barrel following renewed Middle East supply disruptions, reviving imported inflation concerns and potentially delaying monetary easing by the RBI, which could sustain higher borrowing costs.
India’s 10-year government bond yield climbed to around 7.32%, extending its recent gains as accelerating domestic inflation and heavy government bond supply weighed on debt prices. Retail inflation accelerated to 6.09% in October, breaching the Reserve Bank of India’s 6% upper tolerance limit and strengthening expectations of another rate hike in early December, keeping upward pressure on yields. At the same time, the government’s planned INR 340 billion auction of the benchmark 2036 bond will lift its outstanding issuance to INR 2.72 trillion, a record high for a single security, adding to supply pressures.
The US 10-year Treasury yield also rose above 5%, reducing the relative appeal of Indian debt. Moreover, Brent crude recently rebounded toward $96 per barrel following renewed Middle East supply disruptions, reviving imported inflation concerns and potentially delaying monetary easing by the RBI, which could sustain higher borrowing costs.