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Rising US yield, weakening dollar are everyone's problem, says KIE

KIE flags rising tremors in US debt and dollar that could rattle global markets

bond, bonds, bond market
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India’s bond yields currently maintain a “decent” premium over US yields, supported by a stronger macroeconomic position

Samie Modak Mumbai
The recent jump in US bond yields, driven by weakening US macroeconomic fundamentals, is sparking concern about broader effects on global economies.
 
A report from Kotak Institutional Equities (KIE) explains that higher yields reflect bond markets pricing in a ballooning US fiscal deficit alongside mounting macroeconomic and policy uncertainty. This has pushed investors to demand steeper returns to offset growing risks, potentially straining the US fiscal and debt outlook as new bonds are issued at elevated rates.
 
The 10-year US Treasury yield climbed 24 basis points (bps) to 4.4 per cent in May. Meanwhile, the yield on the 10-year Indian