India bonds under pressure before debt supply; hot inflation prints pinch further

Indian government bond yields rose ahead of a planned sale of 340 billion rupees of the benchmark 2036 security, Business Recorder reported. At 10:00 a.m. IST on Friday, its yield stood at 7.3113%, compared with 7.2467% a day earlier, and had gained more than 16 basis points over three sessions.

The sale would lift issuance of the bond to 2.72 trillion rupees, the largest outstanding amount for any single Indian security. Investor caution also reflects October retail inflation in India rising to 6.09% from 5.54% in September, above both the 5.93% Reuters poll forecast and the Reserve Bank of India’s 4% medium-term target. Elevated US inflation and higher Treasury yields have added to uncertainty about interest rates, with markets increasingly expecting another Indian rate rise in early December.