FX.co ★ India 10Y Yield Pauses Decline

The yield on India’s 10-year government security (G-Sec) hovered around 6.8%, steadying after four consecutive weeks of declines as softer crude oil prices and robust foreign inflows buoyed bond demand. Yields stayed under downward pressure after Brent crude slipped 1.9% to $79.04 per barrel, following Iran’s export waivers under an interim agreement with the US. However, further easing was capped by uncertainty over the durability of the US–Iran truce and renewed worries about disruptions in the Strait of Hormuz.

Investors also assessed El Niño–related risks to inflation and growth, while elevated global yields—reflecting the US Federal Reserve’s hawkish stance—kept sentiment cautious. Foreign investors have bought INR 213.5 billion of Indian bonds so far this month, the highest in 15 months, supported by the Reserve Bank of India’s June 5 measures to attract inflows and by recent tax cuts. Market participants are additionally awaiting Bloomberg Index Services’ decision on whether to include Indian sovereign debt in its Global Aggregate Index, a move that could further bolster overseas demand.