09.09.202510:15:43UTC+00Indian 10-Year Yield Falls Further

The yield on India's 10-year government securities (G-Secs) decreased to 6.45%, retreating from the four-month peak of 6.63% observed on August 23rd. This change was influenced by diminished concerns over potential budget deficits predicted for the Indian central government. Indian Finance Minister Sitharaman reaffirmed the government's commitment to reaching a fiscal deficit target of 4.4% of GDP for the current fiscal year. This assurance indicates that no additional debt will be incurred to support the government's expansionary policy. In August, Indian yields experienced an uptick due to the United States imposing aggressive tariffs on India, prompting New Delhi to reduce taxes to bolster domestic consumption. Bonds found additional support as low inflation rates continued to fuel expectations that the Reserve Bank of India might consider another rate cut within the year. Recent figures showed that headline inflation dropped to almost a record low of 1.55% in July, falling below the central bank’s lower target of 2%. Furthermore, emerging market bonds saw increased interest due to a decrease in yields for 10-year US Treasury notes, coinciding with a series of unfavorable US labor market reports.