The yield on India’s 10-year G-Sec fell to around 6.71%, extending declines to a fifteen-week low as improved domestic liquidity and easing short-term funding costs boosted demand for government bonds.
Recent Reserve Bank of India measures to attract foreign currency inflows are expected to inject billions of dollars into the banking system, reducing banks’ reliance on higher-cost certificates of deposit and lowering funding costs.
CD yields have fallen by up to 60 basis points over the past three weeks.
Meanwhile, the spread between three-month Treasury bill yields and comparable state-run bank CDs narrowed to 140 basis points from over 200 basis points three months ago.
Softer global yields also supported the bond market, with the US 10-year Treasury yield edging down to 4.37% ahead of Thursday’s US June nonfarm payrolls report.
Lower oil prices further improved sentiment, with Brent crude hovering near $72.50 per barrel, easing concerns over imported inflation.
