Indian government bond yields climbed to their highest level in five weeks on Friday, driven by a spike in global oil prices and investor caution ahead of a major debt auction.
The benchmark 10-year government bond yield rose to 6.3192%, while the yield on the 6.79% 2034 bond increased to 6.3888%. This marks a noticeable upward move in the bond market.
The rise in yields came after oil prices jumped due to fresh geopolitical tensions. Brent crude prices surged to $78.50 per barrel following an Israeli airstrike on Iran. However, prices later eased and settled at around $75.50.
Higher oil prices often raise concerns about inflation and fiscal stress in oil-importing countries like India, leading to cautious investor sentiment in the bond market.
Adding to the pressure, the Indian government is conducting a large debt auction on Friday. It plans to sell bonds worth Rs 30,000 crore (approximately $3.49 billion), which also contributed to the rise in yields as investors awaited the outcome.
Overall, the combination of rising global oil prices and the upcoming domestic bond supply pushed yields higher, reflecting market expectations of short-term volatility and a cautious approach by bond traders.
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