The yield on the 10-year Indian G-Sec fell to 6.36% in April, the lowest in over three years, as the outlook of lower interest rates and measures to increase liquidity continued to support the Indian bond market, detaching prices from US counterparts. The RBI back-to-back cuts to its benchmark repo rate after holding it at the over-four-year high of 6.5% for one full year to attend to halt the slowdown in domestic growth. The central bank also delivered a series of liquidity injections into commercial banks after the its defense of the rupee drained domestic reserves and tightened financing conditions. The central bank is expected to continue cutting rates as the latest inflation data showed that price growth fell to an over five-year low. In the meantime, the rupee halted its selloff and allowed foreign investors to reconsider buying Indian bonds, reigniting foreign inflows into domestic fixed-income securities following their inclusion in funds by DBS and JPMorgan.
The yield on the US 10-year Treasury note hovered around 4.2% on Tuesday, lingering at its lowest levels in three weeks as investors awaited crucial economic data that could reveal the early impact of President Donald Trump’s new tariffs. Markets are focused on Wednesday’s releases of first-quarter GDP figures and the Fed’s preferred PCE inflation gauge, followed by April’s jobs report on Friday. Signs of economic softening could strengthen expectations for earlier Federal Reserve rate cuts, likely putting further downward pressure on yields. On the trade front, China reiterated it is not engaged in talks with the US, refuting claims of communication between President Xi Jinping and Donald Trump. Meanwhile, US Treasury Secretary Scott Bessent noted progress with several trading partners and suggested a trade deal with India could be announced.
