Sharp drop in India-US 10-year bond yield spread in the past 4 years

Yield spread low despite rise in retail inflation in India

The post-pandemic monetary tightening across the globe has resulted in a lower rise in interest rates in India compared with the United States, resulting in a sharp decline in the spread between the Indian and the US 10-year treasury bond yields in the last four years.

 

The spread has now shrunk to around 255 basis points or 2.55 per cent, nearly 45 per cent lower than 10-year average yield spread of 4.52 per cent. The current spread is, however, 13 basis points higher than the 18-year low spread of 2.42 per cent in October last year.

 

The yield on India's