Global bond yields on the rise with inflation, govt borrowing
Government bond yields globally rose to multi-decade highs recently due to sell-offs in sovereign debt. Investors demanded higher returns amid persistent inflation and uncertainty regarding interest rates. India's benchmark 10-year bond yield peaked at 7.50% before slightly declining to 7.24%. Recent easing geopolitical tensions and declining crude prices have supported bond market recovery.…
Global bond yields have surged to multiyear and, in some cases, multi-decade highs in recent months, driven by inflation, government borrowing, and uncertainty surrounding interest rates. The US 10-year Treasury yield reached its highest level since 2002, while Japanese government bond yields hit levels unseen since 1996. India's benchmark 10-year bond yield climbed to a four-year peak of 7.50% in October, before settling around 7.24% by Thursday.
Although pressure on global bond markets has eased in recent weeks due to reduced tensions between the US and Iran, and a decline in crude oil prices, the outlook for global bond markets remains uncertain. Persistent inflation and expectations of tighter monetary policy across major economies are expected to keep yields elevated.
Concerns over rising government borrowing requirements and fiscal sustainability are also anticipated to sustain higher term premiums, limiting the potential for significant declines in long-term yields.
For Indian yields, the 10-year G-Sec yield currently stands around 7.55-7.60%, presenting an attractive entry point for medium-term investors. However, given the potential for near-term fluctuations, it is recommended to gradually accumulate over the next three months rather than making a single purchase, according to Devang Shah, head of fixed income at Axis Mutual Fund.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
