FX.co ★ India 10-Y Yield Hit 10-Month High

India’s 10-year government securities (G-Sec) yield escalated to approximately 6.68%, marking the highest point in ten months. This surge is a direct outcome of continuous global and local pressures impacting government bonds, as seen with a concurrent sharp increase in US Treasury yields, which reached a four-month high. Despite beneficial supply-side conditions, the selling trend continued unabated. Notably, a significant reduction in state governments’ scheduled bond issuance for the week failed to boost demand. The Reserve Bank of India’s interventions, which have included purchasing bonds to the tune of INR 2.54 trillion since December, have offered only modest relief. These purchases have predominantly focused on less liquid securities, rather than targeting the benchmark segment, which limited their market impact. In addition, overseas dealings in the Overnight Indexed Swap (OIS) market further contributed to the upward pressure on yields, with the five-year OIS rate increasing by 12 basis points due to ongoing foreign investor activity.