Govt bonds emerge as top Asian performers as oil, Treasury yields decline

This week, Indian government bonds outperformed peers in emerging Asia, buoyed by a Democratic victory in the U.S. midterm elections and falling oil prices and Treasury yields. The benchmark 6.94% 2036 bond yield rose to 7.1973%, up 2.5 basis points on the day but down 22 basis points for the week. The U.S. 10-year Treasury yield fell around 10 basis points, making Indian debt more attractive to investors.

Indian bonds also led gains in Indonesia, the Philippines, China, Malaysia, and Thailand. Foreign investors poured nearly ₹5,200 crore into Indian bonds, their biggest weekly net purchase since July. With currency stability and low oil prices remaining crucial factors, India is now attracting more global bond investors, say analysts.

The rupee appreciated nearly 1% to 94.10 per dollar, while the Nifty 50 index rose 6.7% to 24,612. Lower crude prices have eased India's inflation outlook and trade and fiscal pressures, as India is the world's third-largest oil importer. The potential resolution of the Iran conflict has also lifted sentiment in Indian markets.