Mumbai, Oct. 27 -- The benchmark 10-year government bond yield rose to a more than three-year high of 7.44 per cent as Brent crude futures touched $110 a barrel, adding to concerns over the economic impact of renewed uncertainty in West Asia.
The yield was last at 7.44 per cent on March 10, 2023, when consumer price inflation stood at 5.66 per cent. Bond yields have been rising for much of the year, increasing by 40 basis points over the past month and by 85 basis points since January 1, 2026, before tensions between Iran and the United States intensified.
Oil prices rose 1.74 per cent over the previous day to reach $110 a barrel. The latest level is similar to that seen in May 2026, when uncertainty over a possible agreement between the United States and Iran coincided with military attacks by both sides. However, the latest increase in oil prices has been more gradual.
Treasury heads at banks had anticipated yields moving towards 7.4 per cent and indicated that they could rise to 7.5 per cent if oil prices remained at current levels. They said yields would need to decline and remain lower for a sustained period before the bond market could ease.
The rupee strengthened by about 53 paise at the open but closed at Rs. 94.3 against the US dollar. Market participants attributed part of the currency's initial improvement to measures by the Reserve Bank of India, while noting that the continuing rise in oil prices remained a concern. Treasury officials said the market could test the 7.5 per cent level in the coming days, citing the absence of a strong return by Foreign Institutional Investors and the lack of a signed trade agreement.
Published by HT Digital Content Services with permission from Construction World.