India bonds weaken as oil exceeds $100/barrel and US yields hit 4.8%
Indian government debt declined Tuesday amidst soaring crude prices above $100 a barrel and rising US bond rates. The rupee fell further against the dollar while the 10-year U.S. Treasury yield reached its highest level since November 2023.
India's government bonds lost value for a second consecutive day on Tuesday, pressured by crude oil prices exceeding $100 per barrel and climbing US Treasury yields. Brent crude rose sharply after tensions near the Strait of Hormuz created supply fears, threatening India's import costs and inflation outlook. The Indian rupee slipped to its fifth straight day down against the dollar. Meanwhile, the benchmark 10-year U.S. Treasury yield climbed to 4.835%, marking the highest level since November 2023, before falling slightly following a $39 billion auction where demand was strong. A liquidity surplus of 10.49 trillion rupees provided some support to Indian markets, allowing yields to rise only modestly to 6.9665%. The US Treasury announced plans to buy up to $6 billion of long-dated bonds on Tuesday, three times the size of previous operations. Inflation data remains the central focus for investors as these geopolitical and monetary factors weigh on financial stability.
