Indian government bonds stay calm ahead of big debt auction
Indian government bonds stayed calm on Thursday, with the 10-year yield holding at 6.5926%.
This comes right before a big government debt auction on Friday, where ₹32,000 crore ($3.66 billion) is up for grabs—a move that matters as states are borrowing more and economic pressures are building.
Investors' sentiment crucial for upcoming auction
The results of this auction will show how confident investors feel about India's finances.
If bond yields go up, it gets pricier for the government to borrow money.
With states borrowing at record levels and recent tax cuts possibly squeezing revenue, all eyes are on how much demand this auction draws.
State borrowing surges, raising concerns
State borrowing has shot up 33% this year to ₹2.2 lakh crore by mid-August, pushing some bond yields to multi-month highs.
This has sparked talk about whether the Reserve Bank of India might step in to steady things—a possibility that's already nudged short-term rates lower as investors hope for some central bank support if needed.