BoB sees India's 10-yr bond yield at 6.70-6.85% with upside risks

India's benchmark 10-year government bond yield is expected to trade in the range of 6.70-6.85 per cent during the remaining part of July 2026, with risks tilted to the upside, according to a report by Bank of Baroda (BoB).Key Influencing FactorsThe report said the outlook for India's bond yields will continue to depend on global developments, including the evolving war situation, international oil prices, liquidity conditions and inflation. It stated, "We expect India's 10Y yield to trade in the range of 6.70-6.85 per cent in the remaining part of Jul'26, with risks tilted to the upside".Global Bond Market ReactionAccording to the report, global bond yields remained sticky in July 2026 as the war situation worsened, leading to a rise in international oil prices that erased most of the decline seen in June 2026. Inflation concerns and expectations of tight monetary policy by global central banks also continued to influence investor sentiment. The report noted that the biggest impact was seen in the 10-year bond yields of Germany and the UK, while the US 10-year yield remained relatively stable as inflation has shown only a modest increase.India's Yield DynamicsFor India, the report said the significant downward correction in the 10-year government bond yield seen in June 2026 has largely been sustained so far. However, it added that the impact of higher international oil prices during July 2026 has not yet been reflected in domestic bond yields.The report cautioned that if the war situation escalates further and global bond yields continue to rise, India's 10-year bond yield is also unlikely to remain insulated from the global trend. It further said that system liquidity remains far below the 1 per cent Net Demand and Time Liabilities (NDTL) level.Domestic Influences and Policy ImpactThe inflation outlook will also depend on the progress and spatial distribution of the monsoon, which could influence the direction of bond yields going forward.The report noted that India's domestic 10-year bond yield, after softening by 25 basis points in June 2026 due to policy measures adopted by the government and the Reserve Bank of India to attract foreign capital, has reversed course and recorded a minor upward correction. It said this movement is in line with the stickiness in international oil prices.Foreign Capital InflowsThe report also highlighted that regulatory measures have helped attract foreign capital, particularly through the Fully Accessible Route (FAR). It said net inflows through the FAR route stood at USD 2.3 billion in June 2026, followed by another USD 864 million in July 2026 up to July 21.It added that if the current pace of inflows continues, the upside pressure on India's bond yields is expected to remain largely contained.(Except for the headline, this story has not been edited by Asianetnews Editorial staff and is published from a syndicated feed.)

BoB sees India's 10-yr bond yield at 6.70-6.85% with upside risks

Synopsis

A Bank of Baroda report projects India's 10-year bond yield to be in the 6.70-6.85% range for July 2026, citing upside risks from global factors like war, oil prices, and inflation, despite a recent softening due to policy measures.

Download App

Recommended Stories