10-year yield seen slipping to 6.64% as Fed bets ease

Mumbai: The recent rally in India's benchmark 10-year government bonds may have further upside, supported by expectations that circumspect US jobs data might prompt the US Federal Reserve to defer an increase in policy rates, treasury officials said.

Furthermore, the likelihood of inclusion of Indian sovereign bonds in the Bloomberg bond index and the retreat in crude oil prices to levels last seen before the start of the Iran war should aid bond prices, they said.

Bond yields and prices have an inverse relationship and move in opposite directions.


"Yields have eased over the past few sessions because the latest jobs data in the US came in lower than expected, so rate hike expectations by the US Fed have eased," said Alok Singh, head of treasury at CSB Bank. "I do not expect a lot of uptick in yields, maybe 2-3 basis points, unless a decision on including Indian bonds in the Bloomberg index is deferred again."

One basis point is a hundredth of a percentage point.

The benchmark 10-year yield has declined 7 basis points over the past three trading sessions, settling below the 6.70% mark for the first time since March 13. It ended at 6.69% on Tuesday and is expected to ease further, at least to 6.64%-6.65% levels.

"I expect further easing near 6.64% levels in the near term, and in the long term, if Bloomberg inclusion happens, 6.50% is visible," Alok Singh said.

The US non-farm payrolls rose at a much slower pace than expected, adding only 57,000 jobs in June (against 129,000 in May 2026) versus expectations of 110,000, according to Bank of Baroda.