The country's 10-year government bond yield hit a three-year high of 7.44 percent on rising geopolitical tensions in the Middle East and an uncontrollable rise in crude oil prices. The previous level was seen on March 10, 2023, when headline inflation rose to 5.66 percent. This boom in the bond market did not happen overnight, but has been steadily increasing since the beginning of this year. More interest rate hikes are likely in the near future. Bond yields have increased by 40 basis points in just one month. From January 1, 2026, yields increased by a total of 85 basis points. Along with the bond market, there is a lot of activity in the foreign exchange market as well, where the rupee-dollar has weakened by about 11 paise to touch the level of Rs 94.90. The root of this entire crisis is the price of crude oil in the international market. Brent crude futures have reached $110 per barrel. Oil prices have increased by 1.74 percent in the last one day. If we look at last week's trend, crude prices have returned to the levels seen in May 2026. Although the trip to $110 has been a little slower this time around, the pressure on the economy is profound. Conditions in West Asia appear to be deteriorating once again, leading to global supply disruptions. High crude prices have increased the risk of inflation in a country like India, which imports most of its crude oil. Treasury heads of major banks in the country are keeping a close eye on the situation. He says that given the current price level of crude oil, the bond yield may go up to 7.5 percent in the future. Experts believe that the only way for bond yields to recover is for crude oil prices to come down in the international market and stay at the same low levels sustainably for a long time.
Tensions in the Middle East, an earthquake in the bond market (Business) is featured on Aapnu Amdavad — the digital home of Ahmedabad, where Amdavadis discover news and everything happening across the city.