FX.co ★ India 10Y Yield at 1-Month Low

The yield on India’s 10-year G-Sec slipped to around 6.64%, retreating from earlier gains to hit its lowest level in more than a month as investors reversed prior selling. Heightened geopolitical tensions, following a US strike that sank an Iranian warship in South Asian waters, sparked a flight to safety and bolstered demand for government securities.

The Dena, a modern Iranian frigate, was reportedly hit by a US submarine in international waters, killing dozens and deepening international concern as the conflict threatens to spill beyond the Middle East. Still, some of the decline in yields was capped as global bond markets came under pressure.

Surging oil prices amid the widening Middle East conflict have stoked worries over inflation and the possibility of delayed central bank rate cuts. This, in turn, has triggered a selloff in US Treasuries and driven yields higher in overseas markets. Against this backdrop, market participants are now shifting their attention to the final central government debt auction scheduled for Friday.