The yield of the 10-year benchmark Government Security (G-Sec) briefly breached the psychologically crucial 7 per cent level, tracking higher US treasury yields and rising global crude oil prices.
Opening 4 basis points (bps) higher at a yield of 7 per cent, the 6.94 per cent G-Sec 2036 ended the day at 6.98 per cent, up 2 bps over the previous close of 6.96 per cent.
Venkatakrishnan Srinivasan, Founder and Managing Partner, Rockfort Fincap LLP, said: “The 10-year G-Sec yield breaching the 7 per cent mark again is significant, particularly after trading as low as around 6.75 per cent a few months ago. The benchmark had last crossed 7 per cent in May 2026, subsequently touching around 7.13 per cent.
“This move is less about the 7 per cent psychological level and more about the global repricing of inflation and interest-rate risks. The escalation in West Asia, Brent crude moving above $95 and the sharp rise in US, UK, German, Japanese and Australian bond yields are creating broad-based pressure on sovereign bonds.”
He noted that for India, higher crude is particularly important given its implications for inflation, the rupee, fiscal balances and the RBI’s rate trajectory. The strong domestic growth environment also gives the RBI greater flexibility to focus on inflation rather than growth support.
“In the near term, the 10-year is expected to remain under pressure, with 7 per cent likely to be tested repeatedly. A move towards 7.10–7.15 per cent cannot be ruled out if crude remains elevated and global yields continue to rise. At the same time, any meaningful cooling in oil or reversal in global yields could bring buying interest back.
“I would therefore see 7 per cent as a warning level rather than a new equilibrium at this stage. The immediate impact is on G-Secs, but if the repricing persists, it will eventually flow through to PSU bonds, corporate bonds, NBFC funding costs and the overall cost of capital,” Venkatakrishnan said.
Nuvama, in a report, said the 10-year benchmark paper tracked the rise in 10Y UST yields to 4.80 per cent levels and elevated Brent crude oil prices above $95.
“Brent crude remained elevated amid US-Iran tensions, Hormuz disruption risks and Trump’s warning of further action. The 10Y UST hardened to 4.81 per cent amid oil-driven inflation fears and hawkish Fed repricing after Governor Barr signalled a rate hike if inflation fails to ease. Over the day, the 10Y IGB eased to around 6.98 per cent as some buying interest emerged at elevated yield levels,” per the report.