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Informist, Wednesday, Jun. 10, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of government bonds ended sharply lower, after moving in a thin band throughout the day, as US President Donald Trump said Iran would have to "pay the price" for delaying a peace deal, dealers said. Following the announcement by the US president in a Truth Social post, prices of Brent crude oil also saw a rise, which weighed on bond prices, dealers said. 

 

Brent crude oil futures for August delivery went above $93 per barrel, after hitting an intraday low of $90.77 per barrel. At 1700 IST, the contract was at $93.40 per barrel, against $92.23 a barrel at 0900 IST.

        

The 6.48%, 2035 bond ended at INR 96.90, sharply lower than INR 97.08 Tuesday. Its yield settled at 6.9353%, higher than Tuesday's 6.9082%. The newer 10-year 6.94%, 2036 bond, which was the most-traded security of the day, ended at INR 99.97, lower than Tuesday's close of INR 100.16. Its yield settled at 6.9431%, against 6.9163% Tuesday. Trade volume in the 6.94%, 2036 bond was INR 414.80 billion at 1700 IST, accounting for more than half the total INR 719.10-billion turnover in the government securities market on Wednesday, data from Clearing Corp. of India Ltd. showed. There were no trades using the e-rupee wholesale pilot Wednesday , as has been the case since February. 

 

The total turnover in the market was slightly muted compared to Tuesday's INR 857.35 billion as traders awaited the release of US CPI inflation data after Indian market hours Wednesday. Traders expect US inflation in May to be higher than April's 3.8%, dealers said. A higher inflation print would increase the chances of a rate hike by the US Federal Open Market Committee, which is scheduled to meet next week. A hike in interest rate or sharp commentary on inflation by new US Federal Reserve Chair Kevin Warsh could push up US Treasury yields, which in turn would weigh on prices of India's government bonds.

 

"US CPI inflation is what I think the market is waiting for," a dealer at a state-owned bank said. "The market will access that number because chances are that it will be higher and that gives the FOMC a chance to hike rates. That could have an impact on our market too."

 

 

Back home, traders covered short positions in the 6.48%, 2035 gilt as they expect liquidity in the bond to fall significantly by next week, dealers said. While most traders see the 6.94%, 2036 bond as the new 10-year benchmark gilt, a few others believe it will take one more auction for it to become the new benchmark. Traders expect the spread between the two bonds to widen by 2–4 basis points by next week, dealers said. A proxy for tracking short sales in a particular bond is the number of trades in the paper in the special repo segment of the Clearcorp Repo Order Matching System. The data at 1700 IST showed trades worth INR 91.08 billion in the 6.48%, 2035 gilt, down from INR 110.81 billion Tuesday. 

 

Foreign banks likely bought bonds Wednesday, continuing their buying momentum from the last four trading sessions, which supported bond prices, dealers said. In the past four sessions, foreign banks have net bought bonds worth INR 222.09 billion, data from CCIL showed. Foreign portfolio investors' bond holdings through the Fully Accessible Route were at INR 3.34 trillion at 1745 IST, as per the CCIL data. Foreign banks were likely front-running demand expected from FPIs after the RBI and the government announced a bonanza of measures to encourage foreign capital inflows Friday. These include tax relief for foreign investors in government bonds, removal of investment restrictions under the General Route, and steps to facilitate cheaper overseas fund-raising by banks and attract fresh FCNR(B) deposits.

 

"Short-covering and value buying is there in the market today (Wednesday)," a dealer at a private sector bank said. "Foreign investors are also there. They have been taking positions post the RBI measures, so that's holding the levels."   

 

Expectations of more inflows in the 3–5 year segment post RBI norms had led to a surge in prices of short-term bonds. However, Wednesday traders grabbed the opportunity and booked profits in these short-term bonds, which weighed on their prices, dealers said. The five-year 6.36%, 2031 bond ended 23 paise lower than Tuesday at INR 99.15. Its yield ended at 6.5709%, over 5 basis points higher than Tuesday's close of 6.5128%. The price on the 10-year 6.48%, 2035 bond was also pulled down as traders booked profits near 6.90% yield, dealers said.

 

"The short-term bond rallied yesterday (Tuesday) due to RBI's liquidity measures and hopes of inflows, but today (Wednesday) it pulled back due to profit booking," a dealer at another private sector bank said.

 

Bond prices did not react much to the result of the auction of Treasury bills Wednesday, as the result was in line with market expectations, dealers said. The RBI set a cut-off yield of 5.30% on the 91-day T-bill, which was nearly 26 basis points lower than the cut-off set last week. Cut-off yields of 5.55% and 5.91% were set on the 182-day and 364-day bills, respectively. 

 

OUTLOOK

On Thursday, government bond prices are likely to take cues from developments in the West Asia war and its impact on Brent crude oil prices, dealers said. The yield on the 10-year 6.48%, 2035 bond is seen opening higher on fears of further escalation in the West Asia war, dealers said. It is expected to move in a range of 6.92-7.00%. If Brent crude oil prices surge past $100 per barrel on overnight escalations in the US-Iran war, the yield could breach the crucial 7.00% mark, dealers said.

 

	WEDNESDAY		TUESDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	96.9000	6.9353%	97.0800	6.9082%
6.94%, 2036	99.9700	6.9431%	100.1600	6.9163%
6.36%, 2031	99.1500	6.5709%	99.3800	6.5128%
6.68%, 2040	95.1300	7.2366%	95.2700	7.2199%
6.90%, 2065	90.6000	7.6600%	91.0700	7.6187%

 

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India Gilts: Reverse gains on profit-booking, caution before US, India CPI

 

	1444 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	97.07	97.16	97.00	97.05	97.08
YTM (%)	6.9101	6.8966	6.9203	6.9128	6.9082

 

	1444 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.16	100.29	100.08	100.14	100.16
YTM (%)	6.9163	6.898	6.9272	6.9191	6.9163

 

MUMBAI--1444 IST--Prices of government bonds reversed earlier gains to trade slightly lower as some public sector banks booked profits on their holdings, dealers said. A slight rise in Brent crude oil prices also weighed on bond prices, they said. Traders were cautious and refrained from placing aggressive bets as they awaited US CPI inflation data, scheduled to be released post market hours Wednesday. Traders also await the release of India's CPI data to be released Friday, they said. 

 

"Some public sector banks are booking profits," a dealer at a state-owned bank said. "Sentiment is broadly positive after the measures announced Friday, but a lot of groundwork has to be done and that will be a trigger for the market after it is done." 

 

Some traders said the next technical level on the 10-year bond on the lower side is 6.85%, whereas it could go to 6.77% if inflows from foreign participants are higher than expected. The 6.77% level on the 10-year is seen only next month, dealers said. Market participants broadly expect such inflows to be near INR 50 billion. Some traders also covered short bets in the paper as they expect liquidity in the paper to reduce, with traders shifting to the new 10-year 6.94%, 2036 bond, dealers said.

 

At the Treasury-bill auction Wednesday, the central bank accepted all the bids for the notified amount of INR 240 billion at better-than-expected cut-off yields, dealers said. It set a cut-off yield of 5.30% on the 91-day T-bill which was nearly 26 basis points lower than the cut-off set last week. Cut-off yields of 5.55% and 5.98% were set on the 182-day and 364-day bills, respectively. Comfortable level of liquidity in the banking system also likely supported the cut-off yields, dealers said.

 

Traders now await US CPI inflation data, scheduled to be released at 1800 IST Wednesday, which will be closely watched for signs of whether the Federal Reserve might shift toward rate hikes later this year after last week's stronger-than-expected jobs report. A stronger case for a rate hike in the world's largest economy may also spur the RBI's Monetary Policy Committee to hike rates in the next meeting, dealers said. Back home, India's May CPI data will be released on Friday, with traders expecting the print to have factored in a rise in energy prices, dealers said.

 

At the weekly gilts auction Friday, traders expect demand for the 6.36%, 2031 bond to be robust as price of this bonds rose post RBI's decisions on likely purchases by foreign portfolio investors, dealers said. The government will sell INR 210 billion of the 6.36%, 2036 bond and INR 110 billion of the 7.71%, 2066 bond at the weekly gilt auction.

 

The total volume in the government securities market at 1444 IST was INR 540.30 billion, lower than INR 564.15 billion at 1430 IST Tuesday, according to data from the RBI's Negotiated Dealing System. For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond, is seen in the 6.89–6.92?nd. (Janwee Prajapati and Durgesh Nanadan)

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 India Gilts: In thin band on caution before CPI; profit-booking caps gains

 

	1235 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	97.11	97.16	97.00	97.05	97.08
YTM (%)	6.9038	6.8966	6.9203	6.9128	6.9082

 

	1235 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.2	100.29	100.09	100.14	100.16
YTM (%)	6.9107	6.898	6.9262	6.9191	6.9163

 

MUMBAI--1235 IST--Prices of government bonds remained largely unchanged as traders maintained caution ahead of the release of CPI inflation data for May and the weekly gilt auction Friday, dealers said. Some traders covered short positions, which helped bond prices Wednesday, dealers said. However, profit-booking by traders on the 6.48%, 2035 bond near the crucial 6.90% yield level capped gains, they said. 

 

Traders await the result of the auction of Treasury bills, which may lend further cues to the market, dealers said. The Reserve Bank of India is expected to set a cut-off yield of 5.31% on the 91-day Treasury bill at the auction Wednesday, according to an Informist poll. The cut-off on the 182-day T-bill was seen at 5.60% yield, and that on the 364-day T-bill was seen at 5.92% yield, as per the poll. Traders expect the cut-off yields to be in line with expectations due to firm demand from banks and mutual funds, dealers said. At the T-bill auction last week, the RBI did not accept any bids for the 182-day and 364-day T-bills.  

 

"Demand was there for the shorter-tenure (91-day T-bill)," a dealer at a private sector bank said. "I think this (T-bill auction) will sail through smoothly because RBI will be comfortable at the levels which traders have bid at."    

 

On Wednesday, traders booked profits on the 6.48%, 2035 bond as its yield remained near the crucial level of 6.90%, dealers said. Some traders covered short bets in the paper as they expect liquidity in the paper to reduce, with traders shifting to the new 10-year 6.94%, 2036 bond, dealers said. This helped prices of the 6.48%, 2035 bond, dealers said. 

 

The trading volume in the new 10-year 6.94%, 2036 bond, which was the most traded bond Wednesday as of 1235 IST, was INR 202.45 billion. The total volume in the government securities market at 1235 IST was INR 343.65 billion, similar to INR 335.55 billion at 1230 IST Tuesday, according to data from the RBI's Negotiated Dealing System.  (Diksha Tripathy and Durgesh Nandan)

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India Gilts: Steady on caution before CPI inflation data; trade volume muted

 

	0932 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	97.08	97.13	97.00	97.05	97.08
YTM (%)	6.9079	6.9008	6.9203	6.9128	6.9082

 

	0932 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.15	100.20	100.11	100.14	100.16
YTM (%)	6.9177	6.911	6.9233	6.9191	6.9163

 

MUMBAI--0932 IST--Prices of government bonds opened steady and moved in a thin band as traders were cautious ahead of the release of India's May CPI inflation data Friday. Trade volume remained muted. Traders booked profits on 6.48%, 2035 bond near the key 6.09% level which capped gains, dealers said. Some traders also covered their short positions in the 6.48%, 2035 bond, which limited losses. Traders will also track the result of T-bill auction for further cues, they said.   

 

"There was some retracement yesterday (Tuesday) also, it (bond yields) did not sustain below 6.90%. I think the retracement will continue today (Wednesday)," a dealer at a primary dealership said. "Some people (traders) will also short (place short bets) before auction Friday, and we have CPI inflation also on the same day."

 

Some traders will also track the result of the Treasury bill auction after the Reserve Bank of India rejected all bids for 182-day and 364-day T-bills at the weekly auction last week, dealers said. Traders expect Wednesday's Treasury bill auction to see a change of pace from the recent trend of skittish bidding, as investors are likely to have more confidence in bidding for short-term debt instruments after the Reserve Bank of India's Monetary Policy Committee held the policy repo rate at 5.25% and kept its policy stance 'neutral'. Some traders expect the cut-off on T-bills to compress by 5 basis points. The government will sell INR 120 billion of 91-day T-bills, INR 60 billion of 182-day T-bills, and INR 60 billion of 364-day T-bills at the weekly auction Wednesday. 

 

Traders will refrain from building aggressive positions ahead of the scheduled release of India's May CPI data Friday as the inflation print will depict the impact of the West Asia war which kept energy prices higher. Traders widely expect the headline retail inflation to have risen to a 16-month high of 4% in May, reaching the Reserve Bank of India's medium-term inflation target, according to the median in an Informist poll of 12 economists. Traders will also track WPI data after the April WPI print came in higher than expectations at 8.30%, the highest in 42 months.    

 

Traders also covered their short positions in the 6.48%, 2035 bond as they prepared to shift to the new 6.94%, 2035 bond. Traders expect the spread between the two bonds to widen by 2–4 basis points by the next week, dealers said. A proxy for tracking short sales on a particular bond is the number of trades in the paper in the special repo segment of the Clearcorp Repo Order Matching System. The data at 0932 IST showed trades worth INR 88.69 billion in the 6.48%, 2035 gilt, sharply down from INR 110.81 billion Tuesday. 

 

The new 10-year 6.94%, 2036 bond recorded the highest trading volume in early trade. The bond recorded INR 34.70 billion of trade volume at 0932 IST, which was over 58% of the total trade volume. The total volume in the government securities market at 0932 IST was INR 59.35 billion, less than half of INR 136.35 billion at 0930 IST Tuesday, according to data from the RBI's Negotiated Dealing System.  (Janwee Prajapati)

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India gilts: Seen steady on caution ahead of CPI data, gilt auction Fri

 

MUMBAI – Government bond prices are likely to open steady Wednesday as the Brent crude oil prices remained unchanged overnight, dealers said. Foreign participants will likely continue their buying momentum, which will support bond prices, they said. Some domestic participants are likely to book profits, limiting gains. Traders will likely refrain from placing aggressive bids ahead of the weekly gilt auction and May CPI inflation data on Friday. 

 

The yield on the 10-year benchmark 6.48%, 2035 government bond is expected to open near 6.91% and oscillate between 6.90% and 7.00% during the day, dealers said. Foreign banks are likely to continue their buying momentum after they net bought gilts worth over INR 220 billion in four consecutive trading sessions. On the other hand, public sector banks continued to sell gilts during the same period as they booked profits, dealers said. Monday, the 10-year benchmark bond ended at INR 97.08, or 6.9082% yield. Bond prices ended higher on inflows from foreign portfolio investors and an easing in Brent crude oil prices. The 6.48 35bond yield fell below 6.90%, a key technical level, for the first time in almost two months. 

 

On the West Asian war front, the US military hit Iranian targets after President Donald Trump said the US would retaliate for an overnight attack that downed a US Apache helicopter, marking a fresh escalation that risks breaking the shaky truce between Washington and Tehran. Iran warned it would restart strikes if Israel continued strikes on Hezbollah in Lebanon. Israel's ongoing campaign against the Iran-backed group has complicated Trump's push to turn the fragile ceasefire with Iran into a longer-term deal. 

 

Back home, traders are likely to make space in their portfolio ahead of the fresh supply at the weekly gilt auction Friday. Traders will also track the result of the Treasury bill auction after the Reserve Bank of India did not accept any bids for the 180-day and 364-day T-bills at its auction last week, dealers said.

 

Traders also await the release of India's CPI inflation data, which is widely expected to be higher. Headline retail inflation is likely to have risen to a 16-month high of 4% in May, reaching the Reserve Bank of India's medium-term inflation target, according to the median in an Informist poll of 12 economists. A higher-than-expected print will push up yield on 6.48%, 2035 bond to 7.05%, dealers said.  (Janwee Prajapati)

 

End 

 

US$1 = INR 95.27

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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