India’s 10-year bond yield rose above 8 percent for the first time since May 2015 as concern deepened that higher oil prices will fuel inflation and widen the government’s budget deficit.
The nation’s inflation problem is set to worsen in the coming months, according to a forward-looking survey released by the Reserve Bank of India, which on Wednesday raised interest rates for the first time in four years. Sovereign bonds are heading for a third month of losses as state banks, the biggest holders of the securities, stay away from active participation amid losses and foreign funds sell local debt at a record pace.
