India 10-year yield rises 5bps to 6.68%

The yield on India’s 10-year government securities (G-Secs) rose 5 basis points to 6.68% on March 11, 2026, marking a 10-month high amid sustained global and domestic pressures. The increase followed a broad rise in U.S. Treasury yields, which hit four-month highs, creating spillover effects in emerging markets. Despite a temporary dip to 6.68% on March 10 due to falling crude oil prices and liquidity injections by the Reserve Bank of India (RBI), the upward trend resumed as inflationary risks and borrowing pressures reemerged.

Positive supply-side factors, such as a reduced state bond issuance for the week, failed to curb the sell-off in government bonds. The RBI’s intervention—purchasing INR 2.54 trillion in bonds since December—has provided limited support, as most acquisitions targeted less liquid securities rather than benchmark instruments. Offshore activity in the overnight indexed swap (OIS) market also contributed to the rise, with the five-year OIS rate climbing 12 basis points.

Meanwhile, the RBI injected INR 50,000 crore into the banking system on March 9 to manage liquidity, with a second open market operation (OMO) auction planned for March 13. Analysts remain divided on the yield outlook, with some projecting further increases due to persistent inflation risks and a 16% rise in India’s FY 2026-27 borrowing program, while others anticipate stabilization if geopolitical tensions ease. The central bank’s policy response and global oil price movements will remain critical in shaping near-term bond market dynamics.