FX.co ★ India 10Y Yield Extends Gains

India’s 10-year government bond yield has risen to around 7.32%, extending its recent climb as accelerating domestic inflation and heavy sovereign bond issuance weigh on prices. Retail inflation quickened to 6.09% in October, breaching the Reserve Bank of India’s 6% upper tolerance limit and reinforcing expectations of another rate hike in early December, thereby maintaining 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 stock to INR 2.72 trillion, a record high for a single security, intensifying supply-side pressures. Adding to the headwinds, the US 10-year Treasury yield has moved above 5%, eroding the relative attractiveness of Indian debt. Meanwhile, Brent crude has recently rebounded toward $96 per barrel amid renewed supply disruptions in the Middle East, stoking concerns over imported inflation and potentially delaying any monetary easing by the RBI, which could entrench higher borrowing costs for longer.