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Oil Surge Rattles Indian Bonds, Yields Hit 3-Week Peak
14 Jul
Summary
- Benchmark 10-year Indian government bond yield reached a three-week high.
- Spiking oil prices, driven by U.S.-Iran tensions, caused global market anxiety.
- Foreign investors have injected nearly $6.5 billion into Indian bonds since June.
Indian government bonds faced a notable downturn on Tuesday, pushing the benchmark 10-year yield to its highest point in three weeks. This decline occurred as a sharp increase in oil prices, resulting from heightened tensions between the U.S. and Iran, instilled global market anxiety. The benchmark 6.94% 2036 bond yield climbed to 6.7945%, reflecting the broader market jitters. The Indian rupee also weakened against the dollar, and the stock market in Mumbai experienced a decline. Offshore paying drove up overnight indexed swap rates as traders factored in rising oil prices and the potential for higher global interest rates. Despite the immediate market pressures, foreign investors have demonstrated sustained confidence in Indian debt, injecting nearly $6.5 billion into government bonds since June. This inflow suggests a long-term positive outlook from international investors, potentially influenced by an upcoming decision on the inclusion of Indian bonds in a major global index.
