India’s 10-year government bond yields continue to rise

India’s 10-year government bond yield has risen to around 7.32%, extending its recent upward trend as accelerating domestic inflation and massive government bond supply put pressure on bond prices. October retail inflation climbed to 6.09%, breaching the Reserve Bank of India’s 6% tolerance ceiling and reinforcing market expectations of another rate hike in early December, keeping upward pressure on yields. At the same time, the government plans to auction 340 billion rupees of 2036 benchmark bonds, which will push the outstanding issuance to 2.72 trillion rupees—a record high for a single security—further increasing supply pressure. The US 10-year Treasury yield has also broken above 5%, reducing the relative appeal of Indian bonds. In addition, renewed concerns over Middle East supply disruptions have pushed Brent crude back up to around $96 per barrel, reigniting worries over imported inflation and potentially delaying monetary easing by the Reserve Bank of India, thus keeping borrowing costs elevated.