US Fed Rate Hike Sends Ripples Through Indian Bond Markets

The US Federal Reserve raised interest rates by 25 basis points on September 16, causing the 10-year Treasury yield to touch 5.02%. This increase in yields has put pressure on Indian bond yields and influenced global fixed-income markets.

Since last year, the US 10-year Treasury yield has risen close to 90 basis points, reaching about 4.93% by September 17. Meanwhile, India's benchmark 10-year government security (G-Sec) yield crossed the 7% mark, quoting at 7.05-7.07%, up from roughly 6.81% in mid-August and about 6.47% a year ago.

Experts warn that bond yields can potentially rise further, making it essential for investors to be cautious of a spike in yields, which would lead to a fall in bond prices.