FX.co ★ India 10Y Yield Eases From 3-Year High

The yield on India’s 10-year government security hovered around 7.37%, retreating from a three-year high as investors moved in to find value after a sharp selloff. Strong demand from domestic lenders, particularly state-owned banks, helped support bond prices. Still, the upside in prices—and corresponding downside in yields—remained capped ahead of several heavy supply events: INR 312 billion in state bond issuances and the RBI’s INR 250 billion open-market bond sale, with an additional INR 340 billion auction slated for Friday. Yields have climbed 20 basis points over the past four sessions after the RBI raised its policy rate by 25 basis points and adopted a calibrated tightening stance. Expectations of further rate hikes have firmed following a pickup in September inflation to 5.54%, while Brent crude has stayed above $105 a barrel. Investors were also awaiting US inflation figures for signals on the Federal Reserve’s policy path.