Indian-US Bond Yield Spread Hits Nearly-Year Low

The interest rate spread between Indian and US bonds has reached its lowest level in nearly a year. The yield on India's benchmark 10-year government bond fell to around 6.77%, while the US 10-year Treasury yield remained steady at approximately 4.64%. This narrowed the yield spread between the two countries' benchmark sovereign bonds to about 213 basis points, the tightest level since early August last year.

The market expects foreign capital inflows and declining oil prices to continue supporting Indian bonds. In contrast, the US Federal Reserve is predicted to raise interest rates in September, while the Reserve Bank of India is likely to keep rates unchanged both in the upcoming week and for the rest of the year.