Benchmark 10-year yield softens to 9-month low

Mumbai: The yield on India's 10-year benchmark government paper slid to its lowest level in nine months, helping bring down the cost of borrowing across the economy, as a fall in US bond yields and lower than anticipated supply of local debt created appetite for sovereign debt.

The 10-year benchmark bond yield closed at 7.02%, its lowest level since June 14, 2023, Bloomberg data showed. In the previous day's trade, the benchmark yield had settled at 7.03%. Bond prices and yields move inversely. Government bond yields are the benchmarks used for pricing bonds issued by companies.

Easing liquidity conditions in the banking system also improved the view on government bonds, although a further decline in yields was reined in ahead of two crucial data releases Tuesday - on inflation in the US and at home.


Yield on the 10-year US bond touched a five-week low of 4.05% on Monday, having registered a steep decline from 4.25% at the end of last month. A fall in US bond yields increases the appeal of relatively higher-yielding fixed-income instruments in emerging markets such as India.

"Market gauges are now predicting more than 70% chance of a Fed rate cut in June and that gives room for our 10-year bond yield to fall to 6.90% levels in coming weeks," said Naveen Singh, head of trading at ICICI Securities Primary Dealership.