Indian government bonds experienced a surge on Wednesday, fueled by growing optimism among investors. This positive sentiment stems from increasing expectations of rate cuts and a relaxation of supply concerns. The yield on the 10-year benchmark note dipped to 6.4930% in the morning, a notable decrease from Tuesday's close of 6.5101%. Bond yields and prices move in opposite directions.
Market analysts attribute this rally to sustained buying activity following the release of the central bank's policy and debt calendars, which has eased market tensions. A trader at a private bank noted that the market has resumed buying. The quarterly debt calendar released by Indian states earlier in October indicated a lower-than-expected borrowing figure of 2.82 trillion rupees ($31.77 billion) via bond sales for the October-December quarter, compared to market expectations of approximately 3.25 trillion rupees.
The upbeat mood was also reflected in Tuesday's state auction demand, further boosted by the Reserve Bank of India's (RBI) dovish stance. On October 1, the RBI maintained its policy rate but lowered its inflation outlook, paving the way for potential future rate cuts. Most market participants now anticipate a rate cut by the RBI in December.
Falling U.S. Treasury yields have also contributed to the positive momentum. The 10-year U.S. Treasury yield was down for a second consecutive day, standing at 4.1229%.
Furthermore, traders are closely monitoring New Delhi's weekly auction to assess demand. The RBI is scheduled to sell 15-year and 40-year bonds worth a total of 280 billion rupees ($3.15 billion) on Friday.
On October 3, 2025, Indian government bonds also rose as sentiment turned upbeat following dovish central bank guidance earlier in the week. The yield on the 10-year benchmark note ended at 6.5114%, after ending at 6.5166% on Wednesday. Earlier in the day, the government sold a new 10-year security worth 320 billion rupees ($3.60 billion) at a cut-off yield of 6.48%, which was in line with estimates.
снижением инфляции.
