06.11.202507:27:53UTC+00India 10Y Yield Hits Two-Week Low

The yield on India's 10-year government security has decreased to approximately 6.5%, marking its lowest point in two weeks due to continued acquisitions by the central bank. Entities such as insurers, pension funds, and particularly the Reserve Bank of India have been actively purchasing bonds, with transactions totaling nearly 50 billion rupees on Tuesday alone. These actions aim to stabilize the market and mitigate the upward pressure on yields. The central bank has raised concerns over the high bond yields, which have persisted despite policy rate cuts and the growing differential with U.S. Treasuries. It is currently engaging in discussions with market stakeholders this week and next to evaluate the prevailing market conditions. Traders are now turning their attention to the upcoming auction on Friday of the new 10-year 6.48% 2035 bond, valued at 320 billion rupees. This bond is poised to replace the existing benchmark and could influence future yield movements. On the policy side, the majority of market analysts anticipate a reduction in rates by the Reserve Bank of India in December, with the market factoring in approximately 20 basis points of easing in the coming months, supported by a favorable inflation forecast.