US Treasury yields plunge, US-India 10-year government bond yield spread widens to 4-month high

US Treasury yields have dropped sharply, causing the yield spread with Indian government bonds to widen to levels not seen in four months. The 10-year US Treasury yield has fallen by more than 20 basis points over the past week, reaching 4.03% (UTC+8). Over the same period, the yield on India’s 2035 government bond with a 6.48% coupon declined by about 6 basis points to 6.6642% (UTC+8). The yield spread between the two has widened to 263 basis points, the highest since October 18, and up significantly from 238 basis points a month ago. A trader at a primary dealership said: "US yields are likely to drop below 4%, and there is further room for the spread to widen, but Indian 10-year government bond yields will face strong selling pressure in the 6.62%–6.63% range." Weaker-than-expected US inflation data and rising expectations of a Federal Reserve rate cut have driven US Treasury yields lower, while the Indian bond market continues to face supply pressures.

Editor: Wang Yongsheng