India's 10-Year Bond Yield Advances for Third Consecutive Session Amid Crude Oil Price Spike
Indian Bond Yield Rises for Third Consecutive Session Amid Rising Crude Oil Prices
India's benchmark 10-year government bond yield traded higher for the third consecutive session on May 11 as crude oil prices surged following the rejection of peace proposals aimed at ending the ongoing conflict in the Middle East between the United States and Iran.
The 10-year bond yield was trading at 7.015 percent at 9:10 am, marking a 4 basis point increase from Friday's close of 6.981 percent. This rise in bond yields is likely to have a negative impact on the Indian economy, particularly in the context of ongoing global economic uncertainty.
Global Investment Trends
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
Global funds turned net sellers of Indian equities on May 8, offloading stocks worth Rs 39 billion on the National Stock Exchange (NSE). Foreign investors also sold Rs 135 crore worth of sovereign bonds under available investment limits and withdrew Rs 152 crore from corporate debt markets. However, state-run banks purchased Rs 4,840 crore worth of sovereign bonds on May 8, while foreign banks sold Rs 3,440 crore worth of bonds, according to data from the Clearing Corporation of India Limited (CCIL).
| Investor Type | Sovereign Bond Purchases/Sales (Rs crore) |
|---|---|
| State-run banks | 4,840 |
| Foreign banks | -3,440 |
| Global funds | -39,000 |
| Foreign investors | -135 |
Global Economic Developments
Brent crude prices moved higher after President Donald Trump rejected Iran's response to the peace proposal. The dollar index also strengthened, and risk assets weakened globally. Trump said he had a productive call with Israeli Prime Minister Benjamin Netanyahu, who stated that the conflict with Iran would continue until Iran's nuclear enrichment facilities and proxy networks are dismantled. Israeli attacks on Lebanon continued, while Hezbollah claimed drone strikes on Israeli military camps. The United Arab Emirates also said it intercepted drones launched from Iran, keeping geopolitical tensions elevated and supporting higher crude oil prices.
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Investor Takeaway
Investors should be cautious of potential market volatility due to global events.
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