23.10.202607:16:22UTC+00India 10Y Yield Extends Gains as Oil Prices Surge

The yield on India’s 10-year government security (G-Sec) inched up to around 7.46%, extending its rise for a second consecutive session. Investor sentiment was dampened by a sharp increase in global crude oil prices, though the upside in yields was capped by a decline in U.S. Treasury yields.

Brent crude crossed USD 114 per barrel, hitting a five-month high after Houthi attacks on Saudi Arabia heightened fears of supply disruptions. Given that India imports nearly 90% of its crude oil needs, a prolonged period of elevated prices risks widening the import bill, stoking inflation, pressuring the rupee, and straining public finances.

At the same time, market participants remained cautious ahead of a government bond auction worth INR 330 billion, which kept demand for sovereign debt subdued. The yield on the benchmark 6.94% 2036 bond moved higher, approaching the 7.50% mark.

In contrast, U.S. Treasury yields slipped below 5%, weighed down by weaker economic data, a selloff in equities, and mounting concerns about the returns on heavy AI-related investment and its implications for future growth.