Mumbai Indian government bonds are
expected to stay under pressure in early trade on Tuesday,
tracking a further slide in U.S. Treasuries, while domestic
sentiment remains subdued amid demand-supply concerns.
The benchmark 10-year 6.48% 2035 bond yield
is likely to be in the range of 6.66% to 6.70%, a trader with a
private bank said. It ended at 6.6842% on Monday. Bond yields
move inversely to prices.
“We would again see a test of the 6.70% level on the
10-year, but since state debt supply is lower, an upside break
is not likely and bulls will support,” the trader said.
US Treasury yields jumped to near multi-month highs on
Tuesday, as President Donald Trump’s threats to rekindle a trade
war with Europe rattled markets and shook investor confidence.
The yield on the benchmark 10-year U.S. Treasury note
rose above the 4.25% mark for the first time in
almost five months.
On Saturday, Trump said he would impose an additional 10%
import tariff starting February 1 on goods from some European
nations, until the U.S. is allowed to buy Greenland.
Back home Indian states will raise 130 billion rupees
($1.43 billion) through sale of bonds later in the day, sharply
lower than the 386 billion rupees according to a pre-announced
schedule.
Bond yields have been rising over the last few days, with
the 10-year benchmark bond yield up 10 basis points in January
despite the central bank’s bond purchases.
The RBI is scheduled to buy bonds worth 500 billion rupees,
the last operation under its current schedule, but has included
a set of papers which are not traded actively.
India’s overnight index swap rates are also expected to see
a further uptick, as investors will add to paid positions
tracking Treasury moves.
The one-year OIS ended at 5.57% on Monday,
while the two-year swap rate ended at 5.68%. The five-year OIS
rate settled 4.25 bps higher at 6.07%.
Published on January 20, 2026