Govt Bond Yield Surges As US 10-Yr Yield Breaches 4% At Highest Since 2010

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Govt Bond Yield Surges As US 10-Yr Yield Breaches 4% At Highest Since 2010
Credit: © Reuters.

By Malvika Gurung -- The Indian government bond yield surged almost 1% on Wednesday, following the benchmark US 10-year Treasury yield rallying to its highest level in over 12 years amid concerns of a global economic slowdown intensifying as investors digested the US Fed’s ultra-hawkish monetary tightening policy.

India’s benchmark 10-year bond yield rose 0.65% to 7.339% at 1:30 pm after ending the previous session at 7.291%.

The US 10-year Treasury bond yield surpassed 4% and touched its highest level since Apr 2010 after the policy-sensitive 2-year Treasury yield breached the key psychological level and hit its highest since Aug 2007.

The government bond yields had eased on Tuesday amid expectations of Indian debt being included in global bond indexes in the near term. However, the U.S. Treasury yields elevating to multi-year highs amid investor concerns growing over the outlook for higher interest rates going ahead exerted pressure on the Indian yields.

“Bonds are reacting to U.S. yields, but still the move is very muted as index inclusion theme is still playing on the minds of traders," cited a trader with a primary dealership, Reuters stated.

Domestic markets including the bond markets are awaiting the RBI’s policy decision , scheduled to release on Friday. Most analysts expect the central bank to deliver a 50 basis point rate hike again and take the benchmark lending rate to a three-year high of 5.9%.

Read Also: RBI MPC Outlook: When, Announcement Timing, Rate-Hike Expectations & Headwinds

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