US Yields Rise: Emerging Markets Feel the Pinch

Rising US Treasury yields have been influencing global capital flows, currency movements, and equity valuations across emerging markets, including India. The recent increase in US yields has made US government bonds more attractive to investors, potentially reducing their interest in riskier assets like emerging-market equities.

The sharp rise in the 10-year Treasury yield, which stood at around 5.18 per cent on September 24, 2026, and the 30-year Treasury yield near 5.47 per cent, reflects investor expectations of higher returns due to inflation concerns, stronger economic growth, or increased government debt issuance.

The impact is evident in foreign institutional investor flows into India, which may reassess their exposure to emerging markets as higher returns become available in US fixed-income assets. A stronger US dollar can also create pressure on emerging-market currencies like the Indian rupee, potentially increasing currency-related losses for foreign investors when converting their investments back into dollars.