India 10-year bond yield crosses 7% on rising oil, Treasury yields

According to Business Recorder, Indian government debt sold off during early trading on Friday, lifting the benchmark 10-year yield above 7 per cent for the first time in over three months. The 6.94% 2036 bond reached 7.0226%, its highest level in that span, after finishing Thursday at 6.9762%. By 9:45 a.m. IST it stood at 7.0154%.

The sell-off was tied to rising oil prices and higher US Treasury yields. US yields rose after producer price data showed a 5.4% increase over 12 months through August, which lifted expectations of a Federal Reserve rate increase next week. Markets priced a 25-basis-point hike on Wednesday at 72%, rising from 62% previously, based on the CME FedWatch tool.

Brent crude was quoted at $108, above $100 a barrel, as the worsening Middle East conflict lifted fuel costs and disrupted energy supplies. Yemen's Mocha port has come under Houthi control, adding to risks for Red Sea shipping, while shipping via the Strait of Hormuz remained limited. Because the world's third-largest oil importer faces a bigger bill for crude, higher prices could widen India's import bill and add to inflation pressure.