Bond yields fall 11 bps, rupee gains as oil prices slide after US midterms

The benchmark 10-year government bond yield fell nearly 11 basis points, its sharpest decline in seven months, while the rupee gained for a fourth session amid falling oil prices

Bond yields fell sharply on Wednesday, tracking US Treasury yields, which declined after the Democrats won the US midterm elections. A decline in oil prices and short covering also helped.

 

The yield on the benchmark 10-year government bond fell nearly 11 basis points (bps) on Wednesday, marking its sharpest decline in seven months. In November alone, bond yields have softened by 19 bps after a sharp rise in October.

 

“The bond market is responding to the US mid-term elections which could limit President Trump’s powers with market expecting his stance to moderate on tariffs and Iran. It was also supported by fall in crude prices. In addition, reports of Iran opening its trade routes for some countries is also helping the sentiments,” a dealer with a public sector bank said.

 

 

“Since the last few days, there were short covering with nearly Rs 14,000 crore worth of shorts yesterday and nearly Rs 4000-5000 crore worth of shorts which may have been covered today which is also likely to have weighed on the yields,” the dealer added.

 

There are reports that Iran has exempted India, China, Iraq and Qatar from the Hormuz trade restrictions.

 

Brent crude futures were down 2.12 per cent at $101.54 per barrel following the US elections. The January 2027 Brent contract was also down 1.41 per cent at $102.14 on Wednesday.

 

The rupee, which opened at 94.56 against the dollar — compared with the previous close of 94.75 — strengthened to 94.51 during the day before giving up some gains to settle at 94.65.

 

“The Indian rupee extended its winning streak for the fourth consecutive session, buoyed by a pullback in the dollar index and the crude oil prices following the US mid-term election results. Declining bond yields and positive risk-on sentiment provided additional support,” said Dilip Parmar, senior research analyst, HDFC Securities.

 

The rupee has gained 1.25 per cent against the dollar since October, following regulatory measures by the Reserve Bank of India to curb speculative bets in the derivatives segment. So far in 2026, the Indian unit has depreciated by about 5 per cent.