FPIs keep debt market bets steady despite narrowing bond yield gap

Spread between Indian and US 10-year bond yields at 3.14%, narrowest in over a decade

Despite the narrowing spread of yields between the benchmark 10-year Indian government bond and the 10-year US Treasury bond, foreign portfolio investors (FPIs) are continuing to invest in the domestic debt market this year -- a trend backed by a stable currency and a less volatile bond market. FPIs have been net buyers in the debt market in 2023 so far, marking the first time since 2019.

The yield spread between the 10-year Indian government bond and the 10-year US Treasury note stood at 3.14 per cent on Tuesday – the narrowest in over a decade.

Market participants said investors