Indian bonds battered by global debt rout, oil rally

MUMBAI: Indian government bonds sank early on Wednesday, with the benchmark 10-year yield briefly topping 7% for the first time in three months as a deepening global debt selloff and a fresh spike in oil prices rattled investors. The yield on the benchmark 6.94% 2036 bond was up 3 basis points at 6.9883% as of 10:30 a.m. IST, after breaching 7% at the open. It was near a three-month high. The selloff followed a global reassessment of inflation, fiscal burden and geopolitical risks as US-Iran hostilities escalated and the vital Strait of Hormuz remained shut. The US 10-year Treasury yield rose to 4.81% in Asian trade, its highest since November 2023. Japan’s 10-year yield touched 3% on Tuesday for the first time since 1996, while German and UK yields hit their highest in more than 15 years. Higher developed-market yields reduce the return advantage of emerging-market debt and can spur foreign outflows. “If US yields continue climbing, the Indian 10-year yield could head toward 7.15% in the near term,” a trader at a private bank said. Brent crude topped $95 a barrel during Asian hours, its highest in about six weeks, after fresh US-Iran attacks. India, the world’s third-largest oil i