RBI Worried as 10-Year Bond Yields Stay High
Why in the news
The RBI voiced concern over high government bond yields despite repo cuts and began talks with market players on possible steps.
Key facts
- Spread over the US 10-year Treasury: about 244 bps, versus 219 bps at the start of 2025.
- Repo cuts of 100 bps from February to June; yields edged up after the 50-bps June cut.
- Benchmark 10-year yield: 6.53%; US yield fell 32 bps.
- RBI cancelled a 7-year auction after bidders wanted higher yields.
Market views and events
| Issue | Detail |
|---|---|
| OMO demand | Participants want OMOs to add liquidity; unlikely in November as the last June CRR cut tranche is due at month-end |
| Next auction | 10-year bond, ₹32,000 crore, 8 November; cut-off seen 3-4 bps above 6.48% |
| SDL auctions | Participants prefer uniform pricing over multiple-price |
Concerns
- Banks hold mark-to-market losses and have cut SLR holdings, so they bid cautiously.
Exam angle
- Related terms: repo, CRR, SLR, OMO, bps, yield spread.