India's 10-Year Bond Yield Hits 7% as RBI Faces Rate Hike Pressure Ahead of Friday Decision

According to Jin10, India's benchmark 10-year government bond yield has risen to 7% on June 1, climbing approximately 34 basis points since the Iran war began three months ago. The Reserve Bank of India faces mounting pressure to raise borrowing costs at its rate decision on Friday, as rupee weakness and elevated oil prices fuel inflation concerns. The yield is expected to reach 7.45% by end-2026, according to IndusInd Bank forecasts.

Derives markets are pricing in aggressive rate hikes, with five-year interest rate swaps rising over 60 basis points since the conflict started. Tata Asset Management and Bandhan AMC expect the RBI to hike rates by 75-100 basis points during the current cycle, though most economists predict the central bank will hold steady this week.