Govt 10-year bond yield logs biggest single-day rise in over 7 months

Indian government bond yields marched higher on Monday, with the benchmark yield logging its biggest single-session rise in over seven months, as US Treasury yields continued to rally after robust economic data, while a tumbling rupee also weighed on sentiment. 

The 10-year yield ended at 6.85 per cent, its highest since Nov. 22, compared with its previous close of 6.7724 per cent. The yield posted its biggest single-session rise since June 4.   

 

"There are negative factors for bonds on all fronts as crude oil is rising, US yields are rising and the local currency is declining, leading to selling pressure," said Gopal Tripathi, head of treasury and capital markets at Jana Small Finance Bank. 

"Till the time we do not see any recovery in the rupee and US rates, Indian bond yields are expected to see more upticks." 

Brent crude prices rose above $80 a barrel to their highest in more than four months, driven by wider US sanctions on Russian oil. 

The Indian rupee ended at a fresh record low of 86.6750 and posted its worst single-day decline in over two years on Monday, bogged down by a surge in the US dollar, likely outflows from local equities and limited intervention from the central bank. 

The 10-year US Treasury yield rose to its highest since November 2023 on Monday after US jobs growth unexpectedly accelerated in December, while the unemployment rate fell below market expectations. 

US yields had already been rallying on concerns that President-elect Donald Trump's proposed policies could reignite inflation, leading to fewer rate cuts. 

In December, the Federal Reserve pared back its expectations of rate cuts in 2025 to 50 basis points from 100 bps. After Friday's jobs report, investors expect just about 26 bps of reductions this year. 

The focus is now on US retail inflation data, due on Wednesday. 

Meanwhile, consumer price inflation in India slowed to 5.22 per cent from 5.48 per cent in the previous month. A Reuters poll of economists had predicted the reading at 5.30 per cent.   

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