Indian Bond Market

For now, bond markets are likely to remain sensitive to both global energy prices and domestic inflation trends, while any ease in these pressures could help improve stability in yields going forward, according to experts.

Bond markets globally are signalling that they need some clarity, primarily on the geopolitical front, before any rally is seen in this asset class.

The narrowing yield differential between US Treasuries and Indian bonds may also prompt a rotation of global capital toward dollar-denominated assets, analysts said.

Rising US bond yields are raising concerns globally, impacting emerging markets like India. Goenka recommends tax equalization on bond income to encourage investment. The situation may force India to raise interest rates due to inflation linked to higher oil prices.

Bond markets from Tokyo to New York came under pressure following fresh attacks in the Gulf region. The yield on the benchmark 10-year US Treasury note surged to a 15-month high of 4.6310%.

The regulator plans to create a specialised category of bond distributors, mirroring the mutual fund model, to simplify KYC and transactions for retail debt investors, Sebi whole time member Amarjeet Singh said on Wednesday.

Government bond yields have been rising globally as elevated crude oil prices amid expectations of prolonged US-Iran war raised inflation risks, while the ceasefire reached last week remained fragile.

Bond yields had risen sharply in March since the onset of the US–Iran war, with the benchmark 10-year yield touching a high of 7.13%. However, yields softened across the curve yesterday, amid optimism over the US-Iran ceasefire, alongside a broadly reassuring policy stance from the central bank.

The benchmark 6.48% 2035 bond yield rose about 4 bps to 7.0734%, its highest level since May 21, 2024. Notably, benchmark yields have increased by 37 bps in March and 45 bps in FY26, despite 100 bps of rate cuts by the Reserve Bank of India (RBI).

The uptick in bond prices followed a sharp decline in crude oil prices, which helped ease inflationary concerns. The benchmark Brent crude contract was nearly 5% lower at $99.60 per barrel, after falling to an intraday low of $97.15.