India’s 10-year government bond yield hovered around 6.87%, stabilizing after touching a two-month high, as fresh debt supply, elevated crude oil prices, and cautious policy signals from the Reserve Bank of India (RBI) kept yields under pressure. The yield on the benchmark 2036 bond closed at 6.8709% on Thursday, its highest closing level in more than two months, ahead of the government’s weekly INR 280 billion bond auction, with over half of the issuance concentrated in 15-year securities.
Brent crude remained near $94 per barrel, stoking concerns about inflation and fiscal pressures. Minutes from the RBI’s latest meeting indicated that policymakers are inclined to raise interest rates if inflation risks intensify. Retail inflation accelerated to 4.45% in July, above the RBI’s 4% medium-term target.
At the same time, strong demand for HDFC Bank’s $1.75 billion dollar bond issue, which drew approximately $7 billion in orders, underscored banks’ efforts to tap the RBI’s concessional funding window before the August 31 deadline. However, this robust offshore issuance did little to ease upward pressure on domestic government bond yields.
