FX.co ★ India Yield Retreats on Softer Oil

The yield on India’s 10-year government security eased to around 6.8%, pulling back from recent highs as softer crude oil prices and lower US Treasury yields lifted demand for sovereign debt. Brent crude fell about 1.5% to roughly $87.7 per barrel, extending the previous session’s 1.8% decline. Supply concerns were tempered by the continued movement of tankers through the Strait of Hormuz and the Red Sea, even as US-Iran talks remained stalled.

At the same time, the US 10-year Treasury yield slipped to around 4.65%, partially reversing Thursday’s sharp rise. Signs of progress toward a potential peace plan in Gaza reduced safe-haven demand, while falling oil prices further supported the retreat in yields.

Gains in Indian government bonds were capped, however, as investors turned cautious ahead of New Delhi’s INR 340 billion auction of the benchmark 10-year bond and next week’s Reserve Bank of India policy meeting, where the central bank is widely expected to leave its key policy rate unchanged.