India's 10-year government bond yield rises to 7.45%, hitting a three-year high

⑴ India's 10-year government bond yield rose to around 7.45%, the highest level since March 2023, as persistently high crude oil prices have heightened inflation concerns and reinforced expectations of further rate hikes. ⑵ Brent crude oil climbed toward $111 per barrel, hitting a five-month high, driven by Red Sea shipping risks and threats to Saudi oil infrastructure, raising concerns about India's import costs, the rupee, and government finances. ⑶ Inflation accelerated to 5.54% in September, and economists expect price pressures in October to breach the Reserve Bank of India's tolerance ceiling. ⑷ The Reserve Bank of India has recently shifted to a "calibrated tightening" stance, strengthening expectations of further monetary tightening. The swap market is pricing in around 100 basis points of rate hikes over the next twelve months, including a possible 50 basis point hike in December. ⑸ Investors are awaiting the release of the minutes from the Reserve Bank of India's October policy meeting later on Wednesday for further guidance.