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New Delhi is set to sell 340 billion rupees ($3.54 billion) of the benchmark 10-year note later in the day, testing demand in a market already pressured by policy-tightening expectations, oil-driven inflation and rising global yields. The benchmark 6.94% 2036 bond yielded 7.1391% at 11:15 a.m. IST, its highest intraday level since May 20, after closing at 7.1067% on Thursday. Indian government bonds are experiencing a downturn as the benchmark yield has surged to a four-month peak. Today's significant debt auction raises concerns about investor interest. The Reserve Bank of India is predicted to raise interest rates on October 7 amid escalating inflation and global yield dynamics. With Brent crude prices remaining high, inflationary pressures persist, prompting market watchers to keep a close eye on U.S. The yield was up about 7 basis points this week, after climbing more than 30 bps over the previous five weeks. The global debt rout intensified overnight, with the U.S. 10-year Treasury yield rising above 5.20%, its highest since 2007. Japan's 10-year yield rose to 3.115%, a level last seen in August 1996, while Germany's 10-year yield, a benchmark for euro zone, hit a 17-year high of 3.5798%. Brent crude hovered near $105 a barrel, keeping inflation risks elevated for oil-importing India, while markets weighed the possibility of a US-Iran truce. After India's August retail inflation accelerated to 4.82% and a Federal Reserve rate hike earlier this month, most market participants now expect the Reserve Bank of India to raise rates on October 7. "An October hike looks definite," a senior state-run bank official said. "It will be a surprise if it does not happen, and yields will shoot up." The RBI is also draining surplus liquidity through open market sales, variable rate reverse repos and sell/buy FX swaps as it readies the market for tighter policy. Deutsche Bank said further operations were likely, while a 50-bp CRR increase remained a last-resort option. RATES Overnight indexed swap rates traded mixed, with the curve already heavily positioned for rate hikes, limiting upside and attracting receiving interest. The one-year rate fell 1.25 bps to 6.16%; the two-year was flat at 6.38%; and the five-year inched up to 6.6450%. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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