Finance1 min read

G-Sec 10-year yields come down 5 bps to 7.39% on Fed signals

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In short

The easing in sovereign debt yields mirrored downward movements in U.S. Treasuries alongside falling energy import costs. Despite this temporary reprieve, market analysts anticipate 10-year yields will rise toward 7.75% by December, with Axis Bank forecasting an 8% mark by June 2027. Immediate supply pressures also loom as the central government plans a weekly bond auction totaling ₹33,000 crore on Friday, featuring ₹3,000 crore in 30-year green debt. The rupee stabilized at 95.26 per dollar, aided by a softening U.S. dollar index and suspected central bank market intervention.

Key points

  • AAA-rated corporate borrowers including REC and SIDBI are bypassing traditional bank loan…: AAA-rated corporate borrowers including REC and SIDBI are bypassing traditional bank loans in favor of bond issuances to reduce financing expenses.
  • Long-term domestic interest rate forecasts remain bearish, with expectations of yields cl…: Long-term domestic interest rate forecasts remain bearish, with expectations of yields climbing to 7.75% by December and 8% by mid-2027.
  • A pullback in crude oil prices to $113 per barrel offered dual support by trimming yields…: A pullback in crude oil prices to $113 per barrel offered dual support by trimming yields and arresting the domestic currency's decline.

Sources checked by our analysis pipeline: 1

US Treasury yields eased after comments from the Federal Reserve on the future rate path were interpreted by markets as signalling a less hawkish stance from policymakers. Oil prices declined to $113 per barrel, from $116 a day earlier, according to Reuters. Domestically, while yields have eased, the outlook is that of weakness, with many projecting a yield of 7.70% to 7.75% by December. Axis Bank has forecasted a yield of 8% by June 2027.

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In the current economic climate, AAA-rated corporations are opting to secure financing via the bond market, finding it more cost-effective than traditional bank loans. The recent interest rate hikes by the Reserve Bank of India have further enhanced the appeal of bonds. Companies like REC and SIDBI have successfully tapped into this market.

The yield opened at 7.42% on Thursday, and gradually eased during the day to close at 7.39%, CCIL data showed. The government will sell ₹33,000 crore of bonds in its weekly auction on Friday, of which…

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